Applying for government loans during Covid-19 for small businesses – Lee Chandler

It’s common knowledge at this point that Covid-19 has drastically impacted the economy in many ways, one of them being the financial hit that business across the world have taken. While many big and established companies have been able to take the hit due to their size, cash reserves, and having goods or services that people continue to use despite the ongoing situation, a lot of small businesses don’t have these luxuries. Many have been forced to stay closed or have seen a lot less customers due to the effects of the current situation for many reasons. Fortunately, the government has begun to step in looking to provide relief to these small businesses in need. In this I will be covering the 4 different types of loans that the government is offering to small businesses during this crisis, covering what they are, qualifications, and how to apply.

 

  1. Paycheck Protection Program

The PPP is a SBA loan that looks provide economic relief to small businesses to ensure that they are able to keep them for having to lay-off their employees. The program is designed so that the SBA will forgive the loan if all the employees of said business remain on the payroll for up to eight weeks and the loan only be used for rent, utilities, employees’ wages, or mortgage interest. The loan that will be given has a maturity of 2 years and an interest rate of 1%, however, this will be forgiven if the above requirements are met. According to the SBA website, they have approved an average loan size of $113,228 and the SBA also provides a guide to calculate your maximum loan amount based on the criteria you and your business meets which can be found at this link: https://www.sba.gov/sites/default/files/2020-06/How-to-Calculate-Loan-Amounts-508.pdf

The SBA states that any of the following businesses affected by Covid-19 may apply for PPP. Any small business that meets the SBA’s requirements for a small business, either industry based or alternative standard. Any entity with the greater of 500 employees, of meets the SBA industry size requirements if they have more than 500. Any business with the NAICS Code that starts with 72 and has more than one physical location, but has less than 500 employees per location. Lastly, sole proprietors, independent contractors, and self-employed people. If you or your business meets any one of the above requirements, then you maybe apply for PPP. On the SBA website, you can search up a lender at: (https://www.sba.gov/paycheckprotection/find?address=10038&pageNumber=2) based on your zip code and apply through any of the eligible lenders that the SBA works with. One you find one, you then proceed to work with them to secure your loan.

All the information above is taken from the SBA website at: (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program), for more information you can visit that link.

 

  1. SBA Debt Relief

 

The SBA Debt Relief is a bit of a different type of loan/relief for small businesses than PPP. Essentially the SBA will pay 6 months of principal, interest, and any other fees for the following loans: current and new 7(a), 504, and microloans that were issued before September 27, 2020. However, this will not be available to PPP loans and EIDL loans, so keep that in mind if you are deciding on whether or not to apply for either of those loans. The great thing about this relief is that you do not need to apply for it. The SBA has notified lenders of their intend to pay six months of fees and told them not to collect from borrowers. However, if you have made a payment after March 27th, you should have been notified to either have your payment returned or have count towards your loan after the SBA has paid for 6 months. If you have not been notified you should contact either your lender or the SBA office for your given state.

 

The above information and any additional information about the SBA Debt Relief can be accessed at: (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief

 

  1. SBA Express Bridge Loans

The SBA Express Bridge Loan is a loan that gives small businesses that already have a relationship with a SBA Express lender. This loan allows the borrow to loan up to $25,000. To qualify for this loan, the business will need to have an already established relationship with a qualified SBA Express lender and you would apply through your current SBA Express lender.

This information and more can be found at: (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-express-bridge-loans)

 

  1. Economic Injury Disaster Loan 

 

Due to the on-going Coronavirus pandemic that has left many businesses in financial distress, the government has been issuing Economic Injury Disaster loans of up to $2,000,00 with an interest rate of 3.75% for for-profit businesses and 2.75% for non-for profit businesses. As of June 15th, the SBA has begun accepting new EIDL applications for small businesses and agricultural U.S. businesses. The turnaround time for everything to be processed is around 2-3 weeks. The terms on the loan are up to 30 years, however, the government are handling this on a case by case basis. The eligibility for this loan is just like other SBA loan or Disaster loans. Your business will need meet one of the following requirements to be eligible to apply: Meet the SBA’s requirements for a small business, agricultural business, Tribal business, cooperative, and any person that is operating a sole proprietorship or an independent contractor working from January31st, 2020 to December. To find out if your business meets the SBA’s requirements for a small business you go to: (https://www.sba.gov/size-standards/). One thing to note; if you already have taken out a disaster loan, you are still eligible to take one of for the Covid-19 pandemic. 

 

Because of the overwhelming amount of businesses applying for an EIDL, the SBA has begun allowing small businesses to apply for an advancement on their EDIL loan of up to $10,000. This advancement will not have to be paid back, however it will be deducted from the total EIDL once received. 

 

To apply for this loan or the advancement, you can simply apply through the SBA website at: (https://covid19relief.sba.gov/#/). When applying for the loan, other than providing the usual documentation about yourself and your business, the SBA has said that they want see the affects that the economic crisis has had on your business. The way they have said to show this is by comparing the financials of the previous year’s period to the period of the economic distress that the business has or is facing.  

 

More information about the EIDL and advancement can be found at: (https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance) and FAQs of this loan can be found at: (https://esd.ny.gov/sites/default/files/EIDL%20FAQ%203.27.20.pdf)

 

The SBA website also offers free business counseling which can be found at: (https://www.sba.gov/local-assistance/find/). These people can help with any additional questions or help that you may need regarding getting loans and relief during this pandemic.

 

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