The Illinois Small Business Emergency Loan Fund offers 3 percent loans of up to $50,000 for up to 60 months to businesses with fewer than 50 workers and less than $3 million in 2019 revenue.
In response to the COVID-19 pandemic, federal, state and local governments, through both legislative and executive means, have enacted or ordered a broad array of financial measures to mitigate the adverse economic effects experienced by businesses and nonprofit entities.
This Alert will identify and explain the economic programs established by both the federal government, the state of Illinois and the city of Chicago to help ease the financial effects of COVID-19.
Federal Economic Aid Programs
Economic Injury Disaster Loans and Loan Advances
Small business owners with fewer than 500 employees currently experiencing a temporary loss of revenue due to COVID-19 are eligible to apply for Economic Injury Disaster Loans (EIDL) to pay immediate expenses such as payroll, bills/accounts payable and fixed debts. Details of the program are discussed in our previous Alerts.
Loan amounts are up to $2 million, with loan advances of up to $10,000. The loan advance shall be awarded within three days of application. The advance can be utilized to keep employees on payroll, to pay for sick leave, meet increased production costs or pay business obligations. The loan advance does not have to be repaid.
Note: As of April 16, 2020, the Small Business Administration (SBA) is currently unable to accept new applications.
Businesses in certain industries may still qualify even if they have more than 500 employees, if they meet the SBA’s size standards.
Paycheck Protection Program
The SBA is offering a low-interest, no fee loan of up to $10 million for small businesses, nonprofits and sole proprietors to help retain employees and aid cash flow through the Paycheck Protection Program (PPP). Previous Alerts discuss the program, its FAQ guide and the interim final rule.
The SBA will forgive the loan if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, insurance, paid sick or medical leave, mortgage interest or utilities. The applying entity must have fewer than 500 employees. Loan repayments will be deferred for six months.
Applicants can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that has agreed to participate.
The Paycheck Protection Program is available through June 30, 2020. Congress has approved additional funding.
Express Bridge Loan Pilot Program
As businesses await proceeds from the EIDL program, the SBA is offering temporary financial assistance of up to $25,000 through the Express Bridge Loan pilot program.
The applicant must have a preexisting relationship with an SBA Express Lender. The borrower can utilize the loan while it is applying for the EIDL loan. However, the loan must be repaid in full or in part by the proceeds from the EIDL loan.
Illinois Tax Assistance Programs
Income Tax Filing and Payment Extension
The filing deadlines for Illinois income tax returns and payment deadlines have been automatically extended from April 15, 2020, to July 15, 2020. This relief applies to all individual returns, trusts, and corporations.
Estate Tax Extension
Estates with returns and payments due between March 16, 2020 and April 15, 2020, will receive a 30-day extension for filing and payment. Please be aware that an extension of time to pay does not waive or abate statutory interest and that payments must be sent to the Illinois State Treasurer.
Sales Tax Extension for Bars and Restaurants
Eating and drinking establishments that incurred less than $75,000 in sales tax liabilities in 2019 will not be charged penalties or interest on payments due in March, April or May 2020 made late. Penalties and interest will be automatically waived; however, qualified taxpayers must still file their sales tax return even if they are unable to make a payment. Any taxpayers taking advantage of this relief will be required to pay their sales tax liabilities due in March, April and May 2020 in four installments starting on May 20, 2020, and extending through August 20, 2020.
Miscellaneous Business Relief for Chicago
Chicago will temporarily defer all business fine collections as well as license renewal and late fees for Chicago’s businesses until April 30, 2020. Chicago will also temporarily suspend non-public safety related business penalties until April 30, 2020. Chicago is also extending due dates for tax payments until April 30, 2020 for the following city taxes:
• Bottled water tax
• Checkout bag tax
• Amusement tax
• Hotel accommodation tax
• Restaurant tax
• Parking tax
Illinois Economic Programs
Illinois Small Business Emergency Loan Fund
The Illinois Small Business Emergency Loan Fund offers 3 percent loans of up to $50,000 for up to 60 months to businesses with fewer than 50 workers and less than $3 million in 2019 revenue.
Borrower loan amounts will be determined by average monthly revenues prior to COVID-19.
To qualify, businesses must have received less than $3 million in gross revenue in 2019 and employ fewer than 50 employees. Employee threshold will be based on average employment over the period of October 2019 to December 2019. Seasonal businesses may base employment on the average from January 2019 to December 2019.
Business must have experienced at least a 25 percent decrease in revenues as a result of COVID-19.
Business must be located in Illinois and provide proof of an Illinois business address and a valid business license from an Illinois jurisdiction. Business must have been in operations for at least one year.
Loan funds must be used for working capital, and at least 50 percent of loan proceeds must be applied toward payroll or other eligible compensation, with a commitment to hire or retain at least 50 percent of the business workforce for six months.
Downstate Small Business Stabilization Program
This relief program is a $20 million fund providing loans of up to $25,000 to small businesses with 50 or fewer employees. The program was specifically established to aid small businesses economically impacted by COVID-19, and offers 60 days of working capital to eligible applicants.
To qualify, applications must be submitted by a unit of local government recognized by the Illinois Constitution that is able to support economic development activities on a sufficient scale. This includes cities, villages and counties.
The primary business location (where people come to receive services) of the benefiting business must not be in an “entitlement” area, as detailed in the program guide linked above.
The business may use funds only for working capital expenses such as employee salaries, general operating expenses, inventory and advertising/marketing expenses.
Chicago Small Business Resiliency Fund
This fund will provide $100 million to small businesses and nonprofits whose operations have been impacted by COVID-19 in the Chicago area.
Loan amounts are equal to the organization’s three months’ average monthly revenues before the COVID-19 outbreak, up to $50,000. The interest rate is 1 percent for the first 18 months of the loan and will increase to 5.75 percent for the loan’s duration. The loan term is up to 60 months amortization.
To qualify, a business must (1) employ fewer than 50 employees, 50 percent of whom are Chicago residents; (2) have realized gross annual revenues of less than $3 million prior to COVID-19; (3) have suffered a revenue decrease of at least 25 percent due to COVID-19; and (4) be located in the Chicago city limits and have been in business for at least one year as of the date of application.
Unemployment Insurance Program
Illinois’ Unemployment Insurance (UI) program provides temporary income maintenance to individuals who have been separated from employment through no fault of their own and who meet all eligibility requirements, including the requirements that they be able and available for work, register with the state employment service and actively seek work.
An individual temporarily laid off because of COVID-19 could qualify for benefits as long as they are able, available for and actively seeking work. Under emergency rules the Illinois Department of Employment Security recently adopted, the individual would not have to register with the employment service. They would be considered to be actively seeking work as long as the individual was prepared to return to their job as soon as the employer reopened.
Relating to a general concern over COVID-19, an individual who leaves work voluntarily without a good reason attributable to the employer is generally disqualified from receiving UI. The eligibility of an individual in this situation will depend on whether the facts of their case demonstrate the individual had a good reason for quitting and that the reason was attributable to the employer. An individual generally has a duty to make a reasonable effort to work with their employer to resolve whatever issues caused the individual to consider quitting.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan for, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Brad A. Molotsky, Matthew E. LoBello, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.