When the coronavirus crisis began, many businesses closed down. For the first time, unemployment numbers skyrocketed as millions of people lost their jobs. The U.S. Small Business Administration (SBA) worked quickly to offer assistance for small businesses and entrepreneurs in a variety of ways. In March 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
The SBA created the Coronavirus Small Business Survival Guide that provided guidance on the availability of federal financial assistance through the SBA. Many states followed suit, offering businesses assistance through state programs, like the Paycheck ERC Protection Program (PPP). These two types of assistance are known as disaster loans or grants.
The purpose of disaster loans is to provide short-term loans to people and businesses that need financial support during natural disasters. The PPP offers small businesses a loan of up to $10 million to help businesses stay afloat during the crisis.
The purpose of grant programs is to give money to companies that cannot pay their bills. The ERC is an example of this type of financial assistance. Like other ERCs, it is an award you can receive based on your income and how much money you have saved in a designated bank account.