US Small Business Resource Center


Infographic: Goldman Sachs Deploys $500 Million to Small Businesses Across the U.S.
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Goldman Sachs believes small business owners and start-up entrepreneurs fuel the engine of local and national economies all over the world. We are deeply committed to supporting these business leaders during this uncertain time with clear, tangible steps to access capital and additional resources.  

Our commercial and philanthropic efforts focused on these communities include our Urban Investment Group, whose work spans comprehensive community and economic development; 10,000 Small Businesses and 10,000 Women which provide education, networking, and access to capital for business owners; and Launch With GS, the firm’s $500 million investment strategy grounded in the belief that diverse teams drive strong returns. Now more than ever we are marshalling our resources, our insights, and our global network to support small businesses struggling with the economic fallout of COVID-19.
 

Goldman Sachs has committed to delivering $550 million across two separate initiatives to help small businesses and communities around the world:

  • Small Business Stimulus Package: A $525 million commitment to provide funding and lending to small businesses during this time of stress.
    • $500 million to provide emergency loans to small businesses across the country deployed by Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), and other mission-driven lenders
       
    • $25 million in grants to Community Development Financial Institutions (CDFIs) and other mission-driven lenders to ensure they have the necessary capacity to underwrite and deliver loans to small businesses as soon as possible 
  • Goldman Sachs COVID-19 Relief Fund: A $25 million commitment through Goldman Sachs Gives to support healthcare organizations, frontline responders, and the hardest-hit communities. To further encourage giving toward relief efforts, we’ve also established a special matching gift program for our people, up to a total of $5 million. 
     

In addition to our own efforts, we have compiled information and resources to help small businesses navigate accessing capital and support during this unprecedented time.

Note: The below is not comprehensive for all 50 states and local jurisdictions and is intended as a guide. You should consult federal and local community resources for the most up-to-date information.

 

CARES Act Paycheck Protection Program Loans

The content in this section was last updated on May 18, 2020.

Please note: The initial $349 billion that was allocated under the CARES Act to Paycheck Protection Program (“PPP”) loans has been exhausted. 

On Monday, April 27, 2020 at 10:30AM EDT, the Small Business Administration resumed accepting PPP loan applications. 

On Friday, May 15, the Small Business Administration released the PPP Loan Forgiveness Application and detailed instructions for the application to inform borrowers how to apply for forgiveness of their PPP loans. The application can be accessed here
 

Understanding the CARES Act Paycheck Protection Program Loans

Watch a webinar covering key updates to and questions about the Small Business Administration's Paycheck Protection Program. This webinar was hosted on April 7, 2020 and was a follow-up to a webinar on March 31, 2020.


For small businesses, the cornerstone of the Coronavirus Aid, Relief, and Economic Security  (CARES) Act is the $349 billion Paycheck Protection Program, an emergency lending facility to provide cash-flow assistance to businesses negatively impacted by the COVID-19 pandemic. Federal resources also include Economic Injury Disaster Loans and Emergency EIDL Grants.

What is the Paycheck Protection Program?

  • The Paycheck Protection Program provides small businesses with loans that may be partially or fully forgiven, and are 100% federally guaranteed (SBA PPP Loans)
  • This program leverages the existing (SBA) 7(a) lending program and current 7(a) lenders, while vastly increasing the available amount, improving loan terms, streamlining borrower requirements, and providing for the expansion of eligible lenders for SBA PPP Loans
  • Please note, PPP Loans are available on a first come, first served basis
     

Who is Eligible?

For-profit businesses, not-for-profit organizations, veterans organizations, and Tribal business concerns that meet the following 3 criteria:

  • Are either
        a) Entities with fewer than 500 employees or small entities as defined by the SBA; certain industries may have higher maximum employee levels OR
        b) sole proprietors, independent contractors and self-employed individuals
  • Were in operation on February 15, 2020
  • Will certify, among other things, that the uncertainty of current economic conditions makes the loan necessary to support ongoing operations

With the exception of businesses with a NAICS industry code beginning with 72 (primarily hospitality and food service industries), certain franchise businesses, and businesses that have received investment from an SBIC, a business’s employee count will include the employees of its affiliates (as defined by the SBA). Please refer to the guidance under “What are the Affiliation Restrictions?” below for more information about the Affiliate rules.


Do businesses owned by large companies with adequate sources of liquidity to support the business’s ongoing operations qualify for a PPP loan? 

  • All borrowers must assess their economic need for a PPP loan under the standard established by the CARES Act and the PPP regulations at the time of the loan application
  • Although the CARES Act suspends the ordinary requirement that borrowers must be unable to obtain credit elsewhere (as defined in section 3(h) of the Small Business Act), borrowers still must certify in good faith that their PPP loan request is necessary
  • Specifically, before submitting a PPP application, all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
    • Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business
    • For example, it is unlikely that a public company with substantial market value and access to capital markets will be able to make the required certification in good faith, and such a company should be prepared to demonstrate to SBA, upon request, the basis for its certification
  • Lenders may rely on a borrower’s certification regarding the necessity of the loan request. Any borrower that applied for a PPP loan prior to the issuance of this guidance and repaid the loan in full by May 18, 2020 will be deemed by SBA to have made the required certification in good faith
    • If your business, together with your affiliates, received PPP loans with an original principal amount of less than $2 million, you will be deemed to have made the required certification concerning the necessity of the loan request in good faith 


What Size is the Loan?

  • The maximum loan size is the lesser of (i) $10 million or (ii) 2.5x average total monthly "payroll costs"
  • If the business has already received an SBA Economic Injury Disaster Loan (EIDL) and chooses to refinance that loan with an SBA PPP Loan, the outstanding EIDL loan amount can be added to the loan amount, subject to the $10 million cap


How are "Payroll Costs" Defined and Calculated?

  • Payroll costs for businesses include salaries, wages, cash tips, payments for vacation, parental, family, medical, or sick leave, and group health care benefits, as well as certain other employment-related expenses
  • Payroll costs for sole proprietors and independent contractors includes wages and net earnings from self-employment
  • Compensation for an individual employee, sole proprietor or independent contractor above $100,000 annually (pro-rated for the period) is excluded
  • The average payroll will be calculated over (i) the year prior to the loan origination, (ii) for seasonal employers, the period between February 15, 2019 through June 30, 2019 or, at the election of the borrower, March 1, 2019 through June 30, 2019, or (iii) the period between January 1, 2020 and February 29, 2020 for businesses not in operation during the period between February 15, 2019 and June 30, 2019
  • For additional guidance on how to calculate payroll, please refer to the U.S. Treasury’s Loan Size Calculation Guidance


What Can the SBA PPP Loan Be Used For?

Borrowers will be required to make a good faith certification that the loan proceeds will be used for:

  • At least 75% of the loan size must be used on payroll costs
  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Employee compensation
  • Business related mortgage interest payments (not principal), lease payments, utility payments
  • Interest on any other business debt obligations that were incurred prior to February 15, 2020


How Much of the SBA PPP Loan Can be Forgiven?

  • Amounts spent during the 8 week period after the loan is disbursed on payroll costs, business mortgage interest, rent, and utilities 
  • Forgiveness will be reduced pro-rata for workforce reductions (this does not include employees who are re-hired)
  • Forgiveness will be reduced if salaries/wages are reduced by more than 25% (excluding reductions for salary and wage amounts over $100,000)
  • At least 75% of the forgiveness amount must be for payroll costs
  • Forgiveness cannot exceed the original loan amount
  • Please refer to additional guidance on forgiveness issued by the SBA on May 15, 2020 here for more details.


What If I Have Already Reduced My Workforce?

  • The Paycheck Protection Program is retroactive to February 15, 2020
  • This means employers can use the funds to re-hire employees and still benefit from loan forgiveness


What Are Other Key Terms of the Loan?

  • Interest rate: 1% annually
  • Loan term: 2 years
  • No fees for borrowers
  • All borrowers will receive at least 6 months of interest and principal payment deferment
  • SBA PPP Loans:
    • DO NOT require companies to have been in operation for one year
    • DO NOT require a personal guarantee or collateral
    • DO NOT explicitly require companies to be profitable


What is the Timing?

  • Lenders were permitted to begin processing loans for small businesses and sole proprietorships on April 3, 2020. Lenders were permitted to begin processing loans for self-employed individuals and independent contractors on April 10, 2020
  • Loans can be made until June 30, 2020
    • Eligible lenders must participate within this timeframe
  • See sample borrower application and borrower factsheet, both released by Treasury on March 31, 2020


Which Lenders Can Make SBA PPP Loans?

  • Eligible lenders currently include existing SBA 7(a) program lenders, federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions
  • All institutions that are eligible may choose to not participate
  • Additional lenders with sufficient qualifications are expected to be added on a rolling basis by the SBA and U.S. Department of the Treasury


What are the Affiliate Restrictions?

  • In general, if a private equity or venture capital firm is deemed to “control” your business, you may not be eligible for PPP Loans
  • If your business is deemed to be “controlled” by another firm, you must aggregate the number of employees of your business and the controlling firm, along with the employees of any other businesses affiliated with the controlling firm
  • In addition to applying any of these affiliation rules, all borrowers that are portfolio companies of a venture capital or private equity fund should carefully review the required certification on the Paycheck Protection Borrower Application Form (SBA Form 2483) stating that “[c]urrent economic uncertainty makes the loan request necessary to support the ongoing operations of the Applicant.”
  • If the aggregate number of employees exceeds 500 (or such higher size standard the SBA has set for businesses in the relevant industry), your small business likely cannot take out a loan under the PPP unless an exemption applies
    • For example: If you have 300 employees and a venture capital firm “controls” your business, and that venture capital firm controls another business with 300 employees, your aggregate employee count is 600. You would likely be ineligible for a PPP Loan without an exemption


What Businesses are Exempt from the Affiliate Rules?

  • If your business qualifies as any of the below, you may be exempt, meaning you can apply for a loan under the PPP as a small business even if you have more than 500 employees when counted with your affiliate(s), including any controlling PE or VC firm
  • Affiliate rule exemptions:
    • U.S. businesses in the hospitality and restaurant industries that are assigned a North American Industry Classification System (NAICS) code beginning with 72
    • U.S. businesses that are SBA recognized franchises
    • U.S. businesses that receive financial assistance from an SBIC
    • Faith-based organizations that are affiliated with another organization if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion
  • Additional details regarding exemptions to the affiliate rules can be found in the Treasury Department’s Frequently Asked Questions regarding the PPP (last updated on May 13, 2020)


How is Control Determined?

Control is determined by four tests:

1. Ownership, where an affiliate owns 50% of the voting equity

2. Affiliation arising under stock options, convertible securities, and agreements to merge

3. Management, where the CEO or President of the business also controls the management of one or more other concerns. Note, this can also apply where a single individual or entity that controls the Board of Directors or management of one business also controls the Board of Directors or management of one of more other businesses

4. Identity of interest, where close relatives have identical or substantially identical business or economic interests

  • Note on minority investors: Even if a minority investor has a right to vote against an action, this does not necessarily mean they are an affiliate. If the individual investor has the ability unilaterally to block the action, standing alone, that would constitute control and result in affiliation.
  • However, the mere fact that a minority investor has the right to vote against an action should not result in control, and thus affiliation.


If my Business is Ineligible for PPP Due to the Affiliate Rules, What Other Options Do I Have?

  • You may be eligible for an Economic Injury Disaster Loan  (details below) among other options that may be announced in the coming days and weeks. You should consult your counsel regarding controls analysis and other options

Read more about the Affiliation Rules in our FAQ here.
 

Economic Injury Disaster Loans and Emergency Economic Injury Grants

The content in this section was last updated on May 18, 2020.

Emergency Injury Disaster Loans (“EIDLs”) and Emergency Economic Injury Grants (“EIDL Grants”) provide cash assistance for businesses suffering substantial economic injury due to COVID-19 across all 50 states, Washington D.C. and the territories.


Who Is Eligible?

Certain businesses that were in operation on January 31, 2020 that have suffered economic injury due to COVID 19 including:

  • Entities with 500 or fewer employees, including businesses, cooperatives, ESOPs, tribal small business concerns, and small agricultural cooperatives
  • Businesses with more than 500 employees that meet the applicable size standard for SBA based on industry
  • Sole proprietorships and independent contractors
  • Private nonprofits (of any size)
  • Note: For EIDLs, businesses with 500 or fewer employees do not require the affiliation analysis that may be required for certain businesses under the SBA PPP Loans
  • As of May 18, 2020, SBA has resumed processing EIDL applications that were submitted before the portal stopped accepting new applications on April 15, 2020 and will be processing these applications on a first-come, first-served basis.
  • As of May 4, 2020, the SBA issued guidance that agricultural businesses are now eligible for SBA’s Economic Injury Disaster Loan (EIDL) and EIDL Advance programs, to provide additional funding for farmers and ranchers and certain other agricultural businesses affected by the Coronavirus (COVID-19) pandemic. SBA is accepting new EIDL and EIDL Advance applications on a limited basis only to provide relief to U.S. agricultural businesses. Learn more about these resources here.


What Can an EIDL Be Used For?

EIDLs are available to pay for expenses that could have been met had the COVID-19 pandemic not occurred, including:

  • Payroll costs including paid sick leave to employees
  • Increased costs due to supply chain interruptions
  • Rent or mortgage payments
  • Obligations that cannot be met due to revenue losses


What are the Key Terms of the EIDL?

  • Up to $2 million loan amount
  • Interest rate of 3.75% annually for small businesses and 2.75% annually for non-profits
  • Up to 30-year loan term
  • Requires personal guaranty for loan amounts above $200,000
  • Submission of tax returns is not required


If I Apply For an EIDL, Can I Also Get an SBA PPP Loan? 

  • Businesses can apply for and receive both EIDLs and SBA PPP Loans but the loan proceeds cannot be used for the same purpose
    • What This Means:  If you use EIDL proceeds to cover payroll for certain workers in April, you cannot use SBA PPP Loan proceeds for payroll for those same workers in April, although you could use SBA PPP Loan proceeds for payroll in March or for different workers in April

 
Key Things To Know About EIDL Loans

Under the CARES Act, EIDL provisions have been expanded:

  • EIDLs can be approved by the SBA based solely on an applicant’s credit score
  • EIDLs of less than $200,000 can be approved without a personal guarantee
  • SBA is not requiring real estate collateral and will take a general security interest in business property
  • Businesses do not need to have been in business for the one-year period prior to the COVID-19 pandemic

If you applied for an EIDL prior to the COVID-19 national emergency declaration, you may have been denied because your specific geography was not yet eligible. You can now re-apply for an EIDL.


What Is an EIDL Grant?

  • An emergency $10,000 cash advance that may be requested during the EIDL application process that SBA will fund within three days of applying for the EIDL
  • The EIDL Grant does not need to be repaid, even if the application for the EIDL is denied
  • Note: If you obtain both an SBA PPP Loan and an EIDL Grant, the EIDL Grant will be reduced from the amount of forgiveness under the SBA PPP Loan


Who Is Eligible for an EIDL Grant?

  • Anyone who is eligible to apply for an EIDL, retroactive to January 31, 2020 to allow those who have already applied for EIDLs to also receive the EIDL Grant


Where Do I Apply?

  • As of May 18, 2020, SBA has resumed processing EIDL applications that were submitted before the portal stopped accepting new applications on April 15, 2020 and will be processing these applications on a first-come, first-served basis.
  • As of May 4, 2020, the SBA issued guidance that agricultural businesses are now eligible for SBA’s Economic Injury Disaster Loan (EIDL) and EIDL Advance programs, to provide additional funding for farmers and ranchers and certain other agricultural businesses affected by the Coronavirus (COVID-19) pandemic. SBA is accepting new EIDL and EIDL Advance applications on a limited basis only to provide relief to U.S. agricultural businesses. Learn more about these resources here.

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Additional Resources


Other Tax Related Resources

  • Refundable Payroll Tax Credits for Emergency Sick Leave and Family Medical Leave
  • Tax: The federal tax return filing deadline is now July 15, 2020, and several states have extended the payment deadlines, so you should check with your state tax agency to find out if your business has more time to file or more time to pay state and local taxes this year as a result of COVID-19 


All content and resources on this site are to be regarded as intended for information purposes only. This information is not legal, tax, economic, accounting or financial advice of any kind. All information is provided “as is”, and Goldman Sachs does not make any representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information provided. The views expressed in this information are not necessarily those of Goldman Sachs. In addition, this information by is not to be taken as constituting the giving of investment advice by Goldman Sachs, nor does the use of this information constitute the user a client of any Goldman Sachs entity. Under no circumstance shall Goldman Sachs have any liability for any loss or damage of any kind incurred as a result of the use of the information. The use of this information is solely at one’s own risk.