Note: January 2021 Updates below.
During this challenging time, many child care providers are in need of additional financial resources and supports due to COVID-19 related closures and loss of income. That’s why we wanted to share some information regarding new federal programs that offer providers the opportunity to receive funding through the Small Business Administration (SBA). These programs include:
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- Paycheck Protection Program (PPP)
- Economic Injury Disaster Loan (EIDL)
- SBA Express Bridge Loans Pilot Program
Paycheck Protection Program (PPP)
The federal Paycheck Protection Program (PPP) is an emergency “forgivable loan” program. That means that employers who borrow through the PPP are eligible to have a portion, or even all, of the loan forgiven assuming that they adhere to program regulations.
January 2021 Update: The $900 billion stimulus is the first significant aid package since the $3 trillion CARES Act passed at the beginning of the pandemic. Included in the House Appropriation Committee’s detailed summary of the relief package is $284 billion for another round of the Paycheck Protection Program.
The Paycheck Protection Program (PPP) provides loans to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The SBA is currently offering:
- First Draw PPP Loans for first time program participants
- Second Draw PPP Loans for certain businesses who have previously received a PPP loan
The proceeds of a PPP loan can be used for the following activities:
- Payroll costs, including benefits,
- Mortgage interest,
- Rent,
- Utilities,
- Worker protection costs related to COVID-19
- Uninsured property damage costs caused by looting or vandalism during 2020, and
- Certain supplier costs and expenses for operations.
For the most current Payroll Protection updates, please check the Small Business Administration’s website. For recovery information in languages other than english, click here.
If you decide to pursue a PPP loan you will need to find a participating lender to speak with. We recommend you check with your financial institute first, but if they are not currently providing this service you can search for the nearest SBA approved PPP lender by entering your zip code here: https://www.sba.gov/paycheckprotection/find
If you have received a PPP loan:
- Consider opening a separate bank account for the funding if you can in order to ensure you are documenting and able to more easily report on how these funds were spent when it comes time to request forgiveness;
- Track your spending of PPP funds
- Document how you have used these funds – to apply for forgiveness, you will submit documentation to prove you used funds for allowable purposes and in the required amounts – read more on updated forgiveness rules and forms here
Economic Injury Disaster Loan (EIDL)
Alongside the Paycheck Protection Program, the Economic Injury Disaster Loan (EIDL) is a possible way to help cover certain costs during this challenging time and you can apply now to receive this money through the SBA. You do not have to talk to a banker. Fill out an online application form through the SBA. Click here to learn more and access the application form.
Here are some key facts about this loan from the NAEYC’s fact sheet for child care providers:
- The EIDL is a low-interest loan directly administered by the SBA for up to $2 million per business that can be extended for up to 30 years.
- The business must intend to use the loan for existing expenses that are otherwise difficult to pay at this time. While you can use it for payroll, it is a particularly good option if your business has debts outside of payroll that you need help covering.
- The EIDL cannot be forgiven, unlike the Payment Protection Program (PPP) loan. You will have to pay the EIDL back, with interest.
Please note, advance funds of up to $10,000 will be available to applicants located in low-income communities who previously received an EIDL Advance for less than $10,000, or those who applied but received no funds due to lack of available program funding. Applicants do not need to take any action at this time. SBA will reach out to those who qualify.
If you need help in filling out this application form, we recommend reaching out to the SBA at 1-800-659-2955 or email disastercustomerservice@sba.gov. Whether you fill out the online application form or contact the SBA by phone or email, you may have to wait a while for your application to be processed during this crisis. We know this can be frustrating, but it will require patience.
SBA Express Bridge Loans Pilot Program
These loans allow small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. They can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loan or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan.
If your business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, it may qualify for an SBA Express Disaster Bridge Loan: Express Bridge Loan Pilot Program
Informative Webinars for Child Care Providers
Recently, the Office of Child Care’s (OCC) National Center on Early Childhood Quality Assurance, in partnership with First Children’s Finance, hosted a webinar to provide basic information to help child care center owners and directors access SBA resources such as PPP loans. You can download the slides and watch the presentation here.
For home-based providers, Tom Copeland’s recent webinar sponsored by the Office of Child Care’s (OCC) National Center on Early Childhood Quality Assurance, “How Family Child Care Providers Can Take Advantage of the PPP and EIDL Forgivable Loans,” can be watched and downloaded here.
Other Resources
We hope this information is helpful; however, we understand this can be a challenging and frustrating time, so please reach out to the LISC Child Care Facilities Fund team at riccelff@lisc.org if you have any questions at all.
Please note that the information provided here may change subject to additional legislation and/or guidance from Congress and the SBA. This article is for informational purposes only and should not be considered legal advice.