US Small Business Administration Announces New Loan Program for Small Businesses Impacted by Coronavirus (COVID-19).
Additional Resources Expected to Come Online Soon
It’s a well-worn axiom that small business is the lifeblood of America. When small business thrives, so do we. When small business is suffers, so do we. Right now, small business is suffering in a way most of us couldn’t have imagined just a few months ago. The devastation is nothing short of staggering. In the span of less than a week Colorado saw daily unemployment claims leap from 400 to 6,800. In California jobless claims went from 2,000 to 80,000. It’s the same story pretty much everywhere you turn. Unfortunately, the general consensus appears to be that we are still in the early stages of this disaster, and the worst yet to come.
Successful small business owners know all too well how dependent their success is on the efforts of their employees. They also appreciate how dependent their employees are on receiving a regular paycheck. Making the decision to reduce an employee’s hours or worse, to lay him or her off, even temporarily, is among the hardest choices a small business owner can face. Unfortunately, most small businesses are now in survival mode and, as the statistics referenced in the previous paragraph graphically demonstrate, survival comes at a terrible cost to the labor force.
In an effort to stem the tide of furloughs, layoffs and business closings, the Federal Government is throwing small business owners a lifeline in the form of a new COVID-19 Disaster Loan Assistance Program. Under the COVID-19 loan program, businesses of any size, including sole proprietors and certain non-profits, are eligible for low interest working capital loans. Loan proceeds can be used for payroll, accounts payable, rent and other expenses of the business. Highlights of the COVID-19 Disaster Loan Program:
· Loans up to $2,000,000.00 (loan amount determined by SBA based on borrower’s financial information)
· Interest rate of 3.75% (2.75% for non-profits)
· Long term repayment options
· Streamlined application (online), decision making and funding
· Loans made directly through SBA
Although these are not “collateral” loans, collateral may be required for loan amounts in excess of $25,000.00.
In reviewing loan applications the SBA will be looking for borrowers with a solid credit history who can demonstrate the ability to repay the loan once the COVID-19 disaster has passed. For this reason the loan program is particularly well suited for established businesses with good pre-COVID-19 financials.
In a conference call on Friday, District Director Antonio Doss indicated that the SBA is committed to a dramatically reduced application and approval timeline. According to the District Director, applicants with a solid credit history can expect a decision within 18-21 days and funding within 30-45 days.
Business owners who are in need of cash to help them make it through the COVID-19 disaster should consider the SBA COVID-19 Disaster Loan Program.
More information regarding SBA COVID-19 related loans can be found at https://www.sba.gov/disaster-assistance/coronavirus-covid-19
Business owners are encouraged to apply online at https://disasterloan.sba.gov/ela
Congress is expected to pass additional small business-friendly programs in the very near future, stay tuned…