We have been following all the government financial relief efforts closely, and we are happy to see that some of these initiatives are starting to take shape. As of today, April 2nd, there are three loans that look most promising for coffee shops: the Paycheck Protection Program, the Economic Disaster Relief Loan and the NYC Small Business Continuity Loan Program. Businesses can apply to all three, however, if you’re approved please note that you may not be able to redeem all of them in parallel.
The Paycheck Protection Program:
- Loan amount: 2.5 times your monthly payroll expenses (up to $10M.) Please know that when calculating your payroll costs, you can also include tips.
- Forgivable: Yes! Up to 100% of this loan is forgivable so long as you use 75% on payroll. The money needs to be used over an 8 week period.
- Payment terms: 2 years, can be deferred for six months.
- Source: The funding comes from banks and other lenders but is guaranteed by the government.
- Annual Interest: 0.5%
- Personal Guarantee: No
- When to apply: Applications are expected to open tomorrow, April 3rd, but be sure to check with your bank.
Last Tuesday, the treasury department released the underwriting requirements for lenders, and they are extremely lenient. That said, the Treasury has left some ambiguity surrounding the forgiveness requirements, so we encourage you to approach this as a loan you may have to repay, but at a .5% interest rate we still believe this is a strong option for many small businesses..
- Loan amount: Up to $2M, but in response to COVID-19 they have released an advance of $10,000. Note that even if you’re denied the loan, you will not have to repay the advance.
- Forgivable: No
- Payment terms: Varying repayment terms of up to 30 years
- Source: The funding comes directly from the government.
- Annual Interest: 3.75%
- Personal Guarantee: Not required for amounts under $250,000
- When to apply: Applications are open here.
Many updates have been made to this loan. When we first came across it in the early days of COVID-19, it was clearly in place to support businesses that experienced physical damage due to a natural disaster, but the application has been modified quickly to account for our current public health crisis. If you are in need of a quick injection of cash, then this might be something to explore, as the $10,000 advance is supposed to arrive within 3 business days of your application being reviewed. Then again, we have asked around and have yet to hear of any business that has received funds yet.
NYC Small Business Continuity Loan *Only available to businesses with locations in the five boroughs.
- Loan amount: Up to $75,000
- Forgivable: No
- Payment terms: TBD. As of 4/2/2020, there is no information on terms published.
- Source: Unclear as of yet, but most likely banks and other lenders with a guarantee from the city.
- Annual Interest: 0%
- Personal Guarantee: TBD. As of 4/2/2020, there is no information on this published.
- When to apply: Now! Applications are open here.
The NYC small business loan was announced in the early days of this crisis, and we are expecting further modifications and updates. As it stands, you must demonstrate at least a 25% revenue decrease due to COVID-19, along with your ability to repay the loan.
We will continue to follow government updates closely and work to understand what they mean for our coffee community. We know these are overwhelming times, so if you have any questions or need assistance understanding your best route forward, the cups team is here to help. We can’t promise that we’ll have all the answers, but we will do our very best to support you.
We encourage all of you to speak with your bankers, and if you have access to an HR consultant, then consider chatting with them, too.
For more information on additional resources available to you during the COVID-19 crisis, please see How coffee shops are navigating COVID-19 & Financial Resources for Small Businesses.