Coronavirus Updates & Resources

The Specialty Equipment Market Association (SEMA) is monitoring the evolving Coronavirus (COVID-19) outbreak and tracking what this means for our industry.

U.S. Small Business Administration Loan Programs

The U.S. Small Business Administration (SBA) offers a number of programs to help support small businesses—from counseling to making loans. Several new SBA initiatives have now been developed to help businesses address the Coronavirus challenges. Specifically, the SBA 7(a) loan program has been expanded to include Paycheck Protection Program loans and a new SBA Coronavirus disaster loan program has been created.

Paycheck Protection Program (PPP)

  • New PP Loans: The COVID-19 relief bill signed into law on Dec. 27, 2020 provided $284 billion in new PPP funding for both first and second loans.
  • First and Second Loans: Loans under the first round of PPP were granted from March to August 2020 before the program expired. The program has reopened, and applicants may again seek a “first loan.” If first loan funds have already been granted and spent, a qualified applicant may request a “second loan.” Companies that did not receive the full amount for which they were eligible under the first loan may now request an increase. (Such increase remains part of the original PPP loan and is not a second loan.)
  • Covered Period: Funds for potentially forgivable expenses must be spent during the Covered Period. Borrowers can set the “Covered Period” of the loan to be between 8 and 24 weeks after the loan disbursement date.
  • Loan Period: The Covered Period for all PPP loans is now May 31, 2021.
  • Application Deadline: Applications for first or second loans must be submitted by May 31, 2021.
  • Defining Small Business: For first loans, the definition of “small business” is generally 500 employees but for motor vehicle parts manufacturers, the definition ranges from 1,000 to 1,500 employees. For a second loan, the business size is limited to 300 employees or fewer, and you must show a 25% revenue reduction during any quarter of 2020 relative to the same quarter of 2019.
  • Loan Amount: PPP loans equal the average of one month’s payroll multiplied by 2.5. Payroll costs include compensation along with other payroll-related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal. The maximum amount for a first loan is $10 million. The maximum amount for a second loan is $2 million (and $10 million for a combined first and second loan).
  • Use of Funds: PPP funds can be used to cover payroll, mortgage interest, rent, utilities, expenditures related to software and cloud computing services, certain property damage costs, certain supplier costs, and certain worker protection expenditures. At least 60% of loan proceeds must be used on payroll costs (i.e., wages, payroll taxes, paid leave, healthcare payments, retirement plan contributions, and group life, disability, dental, and vision insurance). Reimbursable compensation in the form of salaries, wages, commissions or similar payments is capped at $100,000 per employee.
  • Interest Rate and Repayment Terms: The loan interest rate is 1% for five years. Repayments on any amount not forgiven is deferred at least 10 months after the end of the Covered Period. No collateral or personal guarantees are required and there are no borrower and lender fees.
  • Taxable Income: Forgiveness of PPP loans is not to be included as taxable income (federal) but check how your state will treat the loan.
  • Tax-Deductible PPP Expenses: PPP loan proceeds are tax-deductible as business expenses (federal) but check how your state will treat the expenses.
  • Retaining/Rehiring Workers: Borrowers must attempt to keep the same number of employees to the extent possible. A reduction in over 25% of salaries will result in a commensurate reduction in overall loan forgiveness, but if the reduction is less than 25% of salaries, there will be no reduction in loan forgiveness. If a borrower cannot find employees to rehire, or if the entity is shut down due to COVID 19, the borrower will have a “safe harbor” and will not be penalized for a reduction in head count of greater than 25%.
  • Amount Forgiven: The SBA will forgive up to 100% of the loan principal if the funds have been used appropriately (for payroll, rent, utilities, etc.).
  • Streamlined Loan Forgiveness Application: The SBA will now have a simple, one-page form to seek forgiveness of a loan of $150,000 that does not require any submission of documentation. The borrower must simply certify to the following: the number of employees the borrower was able to retain because of the loan; the estimated total amount of the loan spent on payroll costs; and the total loan amount. The borrower must attest that the loan was spent on eligible expenses and that the borrower will retain records that prove compliance with PPP requirements. Employment records must be retained for four years and other records must be retained for three years. (The borrower remains subject to an audit.)
  • Economic Injury: To qualify for a PPP loan, the borrower must certify that the company has economic need (the “Necessity” test). The SBA provides guidance: “Borrowers…must certify in good faith that current economic uncertainty makes the loan request necessary to support the ongoing operations of the Applicant...taking into account 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.”
  • Payroll Taxes: Businesses receiving a PPP loan may also defer payment of 2020 payroll taxes.
  • Receiving PPP Funds: Once a borrower receives a Preferred Lender Program (PLP) number for its loan, the loan is approved by the SBA, and funds are reserved for the borrower. Starting on the date a borrower receives a PLP number, the lender has 10 calendar days to disburse funds. The loan must be disbursed in full, and the 24-week loan forgiveness period begins the day funds are disbursed.
  • Apply Now:
  • Find a Bank: Companies looking to apply for PPP loans are encouraged to use the SBA’s "Find Local Lenders" page to locate the financial institutions closest to you that are writing PPP loans. It’s easy—just type in your zip code.
  • Resources:
  • Loan Forgiveness Instructions

Coronavirus Disaster Loan Program

  • The SBA established an economic injury disaster loan (EIDL) program with low-interest loans for small businesses and non-profits (3.75% and 2.75% respectively) that have been severely impacted by COVID-19. EIDL loans are once again available through the most recent COVID-relief law and the application period has been extended to December 31, 2021. The SBA’s Coronavirus Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $150,000 to help overcome temporary revenue loss. Loans may be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. To be eligible for the loan, borrowers must provide collateral for loans over $25,000. Collateral can be machinery and equipment, furniture and fixtures, and other things. [Note: The SBA previously provided a loan advance of up to $10,000 which automatically became a forgivable grant. EIDL advances are no longer available at this time.]

America’s Small Business Development Centers (SBDCs)

America’s SBDC represents the national network of Small Business Development Centers (SBDCs) that are hosted by leading universities, colleges, state economic development agencies and private partners, and funded in part by the U.S. Congress through a partnership with the U.S. Small Business Administration. Small business owners can go to their local SBDC for FREE face-to-face business consulting and at-cost training on a variety of topics.

There are nearly 1,000 local centers available to help your company identify the best game plan to address COVID-19. For example, this might include taking out a SBA disaster loan to help pay rent and other obligations before taking out a PPP loan for payroll when operations resume. Click here for more information:

Free Webinars

Everything You Need to Know About the New Paycheck Protection Program (with Gene Marks)

Other Resources