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What architects need to know about coronavirus small business relief programs

Corona Column

What architects need to know about coronavirus small business relief programs

(NeONBRAND/Via Unsplash)

For the duration of the coronavirus (COVID-19) crisis, AN will use this column to keep our readers up to date on how the pandemic is affecting architecture and related industries. This weekly article is meant to digest the latest major developments in the crisis and synthesize broader patterns and what they could mean for architecture in the United States. The previous edition of the column can be found here.

It’s been three weeks since President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion relief effort meant to bring the United States economy back from the brink of disaster. Much of that measure was meant to help the country’s millions of small businesses, architecture firms among them, but the rollout of the act’s programs has been rocky and confusing, and at least one of the new programs has already run out of money.

While the relief programs don’t target architecture firms specifically, many may be helpful for the many small studios impacted by the crisis, so I thought it might be helpful to write a brief introduction to the programs. There are many resources linked throughout the article, and because so much of this information is changing so quickly, we may update this article as needed. Obviously, many architects in the U.S. don’t run their own firms, but this article will focus on new resources now available for small business owners, and AN will look at options for other professionals in future articles.

The two biggest programs architects running small firms need to know are the Payroll Protection Program (PPP) and the Economic Injury Disaster Loan Program (EIDL). Both define small businesses as having 500 or fewer employees and are also available for independent contractors. The PPP has reportedly run out of money for now, though it may be replenished if the federal government can pass more legislation. The EIDL also ran out of money and has stopped accepting applications, and may have been rationing what was left. Both programs had experienced long delays as the government was swamped with applications, so if you’re interested in them, it may be helpful to prep application materials to apply as quickly as possible should more funds open up.

Payroll Protection Program (PPP)

The PPP created forgivable loans that come with the following stipulations:

  • The loans cover 8 weeks of payroll and “most mortgage interest, rent, and utility costs,” according to the Treasury Department
  • Companies can borrow up to $10 million, though the loan will only cover $100,000 of payroll per employee. 
  • Only about 25 percent of the loan can cover non-payroll costs. 
  • Companies have to keep or rehire employees laid off or furloughed since February 15, 2020, in order for the loans to be fully forgiven, though partial forgiveness will also be offered.
  • The loans have a 0.5 percent fixed rate, and payments are automatically deferred for six months.
  • The loans do not require collateral.
  • Applications are available and are being received now, and they need to be processed by June 30, 2020.

PPP loans are administered through commercial lenders, so the easiest way to apply may be through a bank with which you already have a relationship. However, if you’re not having luck with your bank or don’t have one, financial tech companies like PayPal and Intuit’s Quickbooks are authorized to offer PPP loans and are open to new customers.

The New York Times and other outlets have reported that applicants are seeing long delays both in getting the applications processed and getting their money, and the architects I have talked to have seen the same. Politico reported yesterday that the program is out of money unless the government approves more funding, but it might be possible to join a sort of waitlist for future loans.

More information about PPP loans is available on a Treasury Department fact sheet, and a basic application shows what information lenders will require. Construction specialists at Pierce Atwood, a law firm, published a succinct guide to PPP in The National Law Review with more information.

Economic Injury Disaster Loan Program (EIDL)

The EIDL is not a new program, but the CARES Act gave it more money and took away some restrictions. It’s run through the federal government’s Small Business Administration (SBA), and is meant to support businesses in areas that have declared emergencies (all 50 states have active states of emergency because of the COVID-19 pandemic). The EIDL provides low-interest loans that do not have to be completely paid back. The EIDL has run out of money and is not currently accepting applications, but the government may expand the program in the future. Application information should be available here if the program reopens.

Part of what was new about the EIDL program is that the first $10,000 of the loan was supposed to be available within three days of applying and was offered as a grant called the EIDL Emergency Advance.

Here are the basics about EIDL:

  • Borrowers apply directly through the SBA, not a third-party lender.
  • Applications were open through December 30, 2020.
  • Loans were typically available in amounts up to $2 million, although…
  • The New York Times reported that loan amounts may be capped at just $15,000 because of a lack of funding.

Finance reporter Stacy Cowley has written a great guide to the new small business relief programs at The New York Times that breaks down the above programs in an informative and easy to read format.

Two other SBA programs offering $25,000 bridge loans for borrowers with an existing relationship with an SBA Express Lender and debt relief for borrowers with existing SBA disaster loans are also available. The SBA website has more information on those.

But what should architects do with the relief funds if they get them?

Esther Sperber, founder of New York-based firm Studio ST Architects, suggested that architects who do receive relief funds use that support “to do something good,” she said. “Since we have little architectural work that we can do [right now] but [may] nevertheless be paid, I would like to use this time to pay forward and help others.” Sperber applied for a PPP loan on April 6, but, as of this article’s publication, had not heard about the status of the application. She suggested that relief recipients do pro bono design work for nonprofits or offer to help related businesses apply for relief of their own.

In other pandemic-related news this week, events continue to move online, including Burning Man, although the AIA completely canceled its 2020 national conference. In a sign of what may be in store for the rest of the country, New York City has stopped all public design work, not just construction. To cope with the crisis, companies and organizations are developing new technologies to monitor the state of construction and the behavior of construction workers. French officials announced that they still expect the Notre Dame Cathedral to reopen in 2024 despite interruptions to site work, and San Francisco announced last week that the city is planning on renting thousands more hotel rooms for homeless people. Iraqi architect Rifat Chadirji also died this week from COVID-19 complications at the age of 93.

In news not related to the pandemic, this past week we also lost Bill Menking, AN’s cofounder and editor in chief. There is a tribute page online now, and there will be an online memorial service in the coming weeks. More information will be available soon.

Be well!