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Multiple financial assistance and relief programs are now available to help Iowa small businesses in light of the COVID-19 pandemic:
- SBA loans, announced by Governor Reynolds on March 21. The U.S. Small Business Administration (“SBA”) issued a disaster declaration for the state of Iowa beginning January 31, 2020 and continuing through the COVID-19 pandemic.
- State Based Disaster Assistance for Small Businesses, announced on March 23. This program arises from a collaboration with the Iowa Economic Development Authority (IEDA), the Iowa Department of Revenue (IDOR), and Iowa Workforce Development (IWD).
SBA Loans
The disaster declaration authorizes the SBA to make loans up to $2 million available statewide to small businesses, as well as private non-profit organizations, to help alleviate economic injury caused by COVID-19. The loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid in light of COVID-19’s impact.
Interest rates are:
- 3.75% for small businesses
- 2.75% for non-profits
For affordability purposes, the SBA offers long-term repayments, up to a maximum of 30 years. Remaining loan terms are determined on a case-by-case basis, based on each borrower’s ability to repay.
Applications can be submitted via the SBA’s website and applicants can monitor the application status after it’s submitted.
If you have questions, please contact your attorney or the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or disastercustomerservice@sba.gov.
State Based Disaster Assistance for Small Businesses
The IEDA, IDOR, and IWD have collaborated to provide financial relief to small businesses and tax extensions to Iowa businesses that have been economically impacted by the COVID-19 pandemic. The disaster assistance includes establishing the Iowa Small Business Relief Program, as well as immediate tax relief through extension of the sales and withholding tax deadline, and deferral of unemployment tax payments for eligible employers.
Iowa Small Business Relief Program – $4 Million in Grant Funds
$4 million is available in small grants ranging from $5,000-$25,000 for employers with 2-25 employees.
An employer must show:
- Business disruption due to the COVID-19 pandemic
- Employed between 2-25 employees prior to March 17, 2020
- Must have a physical location in Iowa
SBRP grants can only be used to assist eligible employers in maintaining operations or reopening businesses following the COVID-19 pandemic. The grant funds cannot be used to pay debts incurred prior to March 17, 2020. IEDA will review SBRP grant applications for eligibility and determine the grant amount by the level of COVID-19 impact, including loss of sales revenue and employees.
For questions, please contact your attorney or businessrecovery@iowaeda.com.
Extension of Sales and Withholding Tax Deadlines
IDOR will automatically extend sales and withholding tax deadlines for any business that is awarded an Iowa Small Business Relief Program grant and waiver of penalty and interest.
IDOR will also consider an extension and waiver for any businesses that apply for the grants.
To be eligible for the extended sales and withholding tax deadlines, an employer must apply and show:
- Business disruption due to the COVID-19 pandemic
- No employee minimum/maximum
IDOR will review applications to determine whether a sales and withholding tax extension is appropriate. While any business that has experienced disruption due to the COVID-19 pandemic can apply for tax relief, extension of sales and withholding deadlines is only automatic for any business that is awarded an SBRP grant. Any other business that applies is subject to IDOR review and determination as to whether tax relief is appropriate.
Applications
Dual applications for SBRP grant approval and extension of sales and withholding tax will be available on the IEDA website beginning at 8:00 a.m. on Tuesday, March 24. The application deadline is Tuesday, March 31, at 12:00 p.m.
Note: The program is not first-come, first-serve; each application received will be reviewed. A complete application is not a guarantee of financial assistance or tax deferral. Applications will be reviewed for eligibility and grant amounts will be determined by level of impact, including loss in sales revenue and employees. Notification of award decisions and disbursement of grant funds will be made in early April and disbursements shortly thereafter.
Unemployment Tax Payment Deferral
IDOR and IWD will allow businesses with fewer than 50 employees to delay unemployment tax payments due April 30 to the end of the second quarter, July 31. No interest or penalties will accrue for delayed payments for the eligible group.
To be eligible for the unemployment tax deferrals, an employer must show the following:
- Employ 50 or fewer employees
- Must be in good standing with no delinquencies in quarterly payments.
Employers electing to take advantage of the unemployment tax payment deferral should contact the IWD Unemployment Insurance Division at either Q1tax@iwd.iowa.gov or 1(888)848-7442. IWD recommends sending an email versus a phone call as there is a high call volume during this time that may lead to extended wait times.
Employers must notify IWD of intent to delay payment by Friday, April 24 at 4:30 p.m. Whether or not they are seeking an extension of tax payment, employers must be current on all quarterly tax payments before Q1 2020 and they must file Quarterly Employers Contribution and Payroll Report electronically by 4:30 p.m. on Friday, April 24 to avoid late report filing penalty.
For questions, please contact your attorney or the IWD Unemployment Insurance Division.
