Throughout the United States, small businesses have recently had to make some tough decisions due to the Coronavirus outbreak. Some have had to close their doors entirely, while others have remained open in a limited capacity. Recognizing this, the President signed the CARES Act on March 27, 2020. This act provides $376 billion in assistance for American workers and small businesses. As a result, federal, state, and local governments and lenders are offering either low- or no-interest loans to affected small businesses. Here are a few of the SBA loans and financing options available.
SBA Paycheck Protection Loans
These loans are meant to provide an incentive for small businesses to continue paying their employees. As long as all employees remain on the payroll for eight weeks and the loan is used to cover rent, mortgage interest, payroll, or utilities, the SBA will forgive these loans though there are some additional requirements for loan forgiveness. Eligibility requirements can be found on the SBA’s website.
The SBA does not make direct loans, so you should contact your local lender to see whether they are participating. Applications can be made through any participating federally insured depository institution, federally insured credit union, existing SBA 7(a) lender, or Farm Credit System institution. Additional regulated lenders may become available once approved and enrolled in the program.
Lenders can begin processing loan applications now, and the program will be available through June 30, 2020.
Economic Injury Disaster Loan Emergency Advance
This is a loan advance of up to $10,000 for small businesses, with under 500 employees, experiencing a temporary loss of revenue due to the outbreak of COVID-19. Eligibility information and applications can be found on the SBA website. Funds can be made available with this loan advance rather quickly after a successful application. This loan advance does not have to be repaid.
SBA Express Bridge Loans
SBA Express Bridge Loans are for small businesses in urgent need of funds. Small businesses that have an existing relationship with an SBA Express Lender may be eligible for an expedited loan of up to $25,000. They can serve to bridge the gap while waiting for a decision on a direct SBA EIDL loan if the need for cash is urgent. Thus, they can either be term loans repaid in full or partially repaid by an EIDL loan that has been approved.
SBA Debt Relief
Another piece of the SBA’s COVID-19 relief efforts is the debt relief initiative. For current 7(a), 504, and micro-loans, the SBA will automatically pay the principal, interest, and fees for six months. They are also extending this offer to new 7(a), 504, and micro-loans that are issued before September 27, 2020.
So while times are tough right now, there is help available for small businesses that need assistance.