South Dakota small businesses are facing an unprecedented economic disruption due to the novel coronavirus (COVID-19) outbreak. Cities have implemented mandatory closures of public spaces or limited patrons to ensure social distancing to prevent the spread of the virus, so those difficulties have only increased.

Congress has reached a bipartisan compromise on a $2 trillion economic stimulus package to address the economic impact caused by the COVID-19 outbreak titled the Coronavirus Aid, Relief, and Economic Security (CARES) Act. A second stimulus package was passed on April 24, 2020, that provided additional funding for these programs. A third stimulus package was passed on December 27, 2020.

We’ve summarized the information that we have as of today, January 11, 2021, below. For a more detailed description of the programs listed below, see the attached Small Business Guide to CARES.

Here is a summary of the provisions included in the CARES Act:

Paycheck Protection Program (Updated 1/11/21)

The Paycheck Protection Program (PPP) provides small businesses, certain non-profits and other entities with zero-fee loans of up to $10 million. Up to 8 weeks of average payroll and other costs (such as mortgages, rent, and utilities) will be forgiven if the business retains its employees and their salary levels. Principal and interest is deferred for up to a year and all borrower fees are waived. These loans are available through SBA 7a lenders.
For an overview of the program, click here.
If you’re a lender, more information can be found here.
If you’re a borrower, more information can be found here.
The application for borrowers can be found here.
Frequently Asked Question on the PPP Program can be found here.
The PPP Loan Forgiveness application can be found here.
The PPP Simpler Loan Forgiveness application can be found here with instructions
for PPP Loans of $50,000 or less.

Paycheck Protection Program Flexibility Act of 2020
New and revised guidance for the PPP program includes:

  • Extends from eight to 24 weeks the amount of time borrowers have to spend PPP funds while remaining eligible for forgiveness.
  • Lowers the amount that must be spent on payroll costs from 75 percent to 60 percent, though there is no forgiveness if payroll is less than 60 percent.
  • Extends to Dec. 31 the period in which employers may rehire or eliminate a reduction in employment, salary, or wages that would otherwise reduce the forgivable loan amount.
  • Replaces the six-month deferral of payments due under PPP loans with deferral until the date on which the amount of loan forgiveness is remitted to the lender.
  • Establishes a minimum maturity of five years for new PPP loans as opposed to the current two-year maturity date.
  • Eliminates a provision that makes PPP loan recipients who have such indebtedness forgiven ineligible to defer payroll tax payments.
  • PPP Interim Final Rule can be found here.

The last day on which lenders can receive a SBA loan number for a PPP loan is August 8, 2020.

Economic Aid Act Extends PPP Program through March 31, 2021
Community Financial Institutions (CFIs) can begin submitting new First Draw PPP loan origination requests on January 11, 2021. CFIs can begin submitting Second Draw PPP loan applications on January 13, 2021. Small lenders (with assets at or less than $1 billion) can begin submitting applications on January 15, 2021 and all lenders can submit applications on January 19, 2021.
Please refer to these documents for more details:
PPP Overview of First Draw Loans
PPP Overview of Second Draw Loans.

U.S. Department of the Treasury program guidelines and frequently asked questions for this program can be found at:

Economic Injury Disaster Loans and Emergency Economic Injury Grants (Re-opened June 15, 2020)

Economic Injury Disaster Loan (EIDL) is a provision to provide an advance of $10,000 within three days of application to small businesses and nonprofits who apply for the SBA EIDL loan. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. EIDLs are loans of up to $2 million that carry interest rates up to 3.75 percent for companies and up to 2.75 percent for private non-profits, as well as principal and interest deferment at the SBA Administrator’s discretion. The loans may be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. You can get information and make application at the following website:

Or businesses can contact the SBA call center at (800) 659-2955 (TTY: 1-800-877-8339) or email The call center is open Monday – Sunday, 8a.m. – 8p.m. ET.

Debt Relief for Existing and New SBA Borrowers

The stimulus includes $17 billion in funding for a provision to provide immediate relief to small businesses with standard SBA 7(a), 504, or microloans. Under this provision, SBA will cover all loan payments for existing SBA borrowers, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out an SBA loan within six months after the President signs the bill. While SBA borrowers are receiving the six months debt relief, they may apply for a PPP loan that provides capital to keep their employees on the job. The six months of SBA payment relief may not be applied to payments on PPP loans.

Detailed information on implementation for lenders is available in this SBA Procedural Notice.

NEW – Economic Aid Act provides additional SBA Payment Forgiveness.
Click here for a flowchart outlining this information. All Section 1112 debt relief is subject to funds availability provided by Congress.

Tax Implications of CARES Act Section 1112 Payment Forgiveness
The Economic Aid Act enacted December 27, 2020, excludes all Section 1112 Payments made on behalf of SBA borrowers from gross income and are not subject to taxation at the federal level. Payments may still be taxable at the state or local level. Borrowers should consult their tax advisor for more information. This includes all Section 1112 Payments whether received in 2020 or going forward. (No Form 1099 for these payments will be provided.) All tax benefits from the Section 1112 Payments will go to the Borrower as if the payments were made by the Borrower.

Paid Leave for Government Contractors

The stimulus includes a provision that provides paid leave for employees working on small business contracts with the federal government. The measure allows agencies to modify the terms of a contract to reimburse small business contractors for the cost of providing paid leave, including sick leave, to employees or subcontractors who are unable to perform work on-site due to a facility closure and cannot telework.

Resources for Business Counseling Services

Many large companies are struggling to respond to the unprecedented economic disruption our nation is facing, so small businesses that have even fewer resources to dedicate to navigating the economic impacts of COVID-19 must have access to reliable counseling and mentorship services. The stimulus provides $250 million in grants to the nation’s network of Small Business Development Centers (SBDCs) and Women’s Business Centers (WBCs), as well as the Minority Business Development Agency’s Business Centers (MBDCs), to provide mentorship, guidance and expertise to small businesses.

Tax Provisions

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020.

Delay of Payment of Employer Payroll Taxes

This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability. Deferral is not provided to employers receiving assistance through the Paycheck Protection Program.

For both our small businesses in South Dakota or our lending partners, please don’t hesitate to contact us if we can be of help.

As a reminder, here at FDDC we are concerned about the stress on our borrowers and the small business community. If you are experiencing a hardship and currently have a loan through the First District Development Company office (including revolving loan funds or SBA 504 financing), please contact our office so that we can discuss your needs promptly. If needed, we can defer your SBA or RLF loan payments for up to six months.

For all small businesses, we will be sending out periodic notices as we learn of resources that are available.

Here is list of current resources that are available:

SBA Disaster Assistance in Response to the Coronavirus
For the most current information from SBA on COVID-19, please visit

The Centers for Disease Control is working around the clock to combat this illness and you can visit for the most up-to-date information and resources.

IRS Tax Relief information can be found at

SD Small Business COVID Interruption Grants are available to South Dakota for-profit small businesses who have experienced a reduction in business due to COVID. Find more information here.

SD Small Start-Up Business Grants are available to South Dakota for-profit small businesses who have registered with the state between September 1, 2019 and June 1, 2020 whose growth has been impacted. Find more information here.

First District Development Company