Due to the fast-changing nature of COVID-19 programs and SBA COVID-19 programs, posts may become quickly out of date. Please check our COVID-19 section for the most up-to-date information on rates, terms, and other info for PPP loans/EIDLs.
President Trump announced a call for the US Small Business Administration (SBA) to increase SBA loans by an additional $50 billion to support small businesses affected by the spread of COVID-19, the disease caused by the novel coronavirus. Here’s everything small business owners need to know:
We will keep this post updated as more information becomes available.
What Are the SBA COVID-19 (Coronavirus) Loans?
On Thursday, March 12, 2020, the SBA released information about disaster assistance for small businesses affected by coronavirus (COVID-19). It’s important to note that none of this is yet official, but we can use it as an outline for what to expect.
Up to $2 million through SBA’s Economic Injury and Disaster Loans.
Small businesses and private, nonprofit organizations in eligible states and territories. Small businesses that have credit available elsewhere are not eligible.
Eligible States and Territories
These loans will be made available in designated states and territories. Before loans can become available, your governor must place a request. Once a state or territory becomes a designated area, information on how to apply will be made available.
Loans can be used to “pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.”
3.75% for small businesses; 2.75% for nonprofits.
Typically long terms, decided on a case-by-case basis, with a maximum term of 30 years.
When Will SBA COVID-19 (Coronavirus) Loans Be Available?
We don’t know yet. The expansion of SBA loans requires congressional approval, so we can expect it to take some time (could be days, weeks, or months). The House of Representatives passed the Families First Coronavirus Response Act Friday, March 13, 2020. While it has economic measures in place, there is no mention of expanded SBA funding.
The good news is that the Senate canceled a planned recess, so the odds of a shorter congressional timeline are better now than when they were first announced. SBA funding typically takes anywhere between 30 and 90 days, so you can expect that baseline, in addition to accounting for the time and changes due to congressional negotiations.
Who Is Eligible for SBA COVID-19 (Coronavirus) Loans?
To qualify for the specially designated SBA loans, your small business or nonprofit organization needs to be in an eligible area. Also, small businesses cannot have any additional credit available. These loans are subject to existing SBA loan guidelines and approval processes, so while additional funding may be made available, that doesn’t mean that borrower requirements will relax.
Additionally, your business needs to demonstrate that you’ve experienced a “blip” as a result of coronavirus. That is to say that the lender will need to see that your business was doing well and experienced a demonstrable economic impact as a result of the disease. The specific dates of this blip and your business’s location will likely factor into a lender’s decision to award the loan.
Alternative Funding Options If You Don’t Qualify or Don’t Want to Wait
SBA loans are not your only funding option. If your business doesn’t quite qualify for an SBA loan or you need funding sooner, here are some financing options to consider.
- Business lines of credit: A business line of credit gives you a financial safety net. You can borrow from a predetermined sum. You can borrow as much as you need as often as you like, and you only pay interest on what you use.
- Short term loans: This option provides funding for when you need quick access to capital that you can also repay quickly. Funds can be available in as little as 24 hours.
- Gift cards: If you don’t qualify for business loan options right now, you may be able to offer gift cards for your customers to buy. That way, your customers can help give you a working capital infusion to get you through the economic turbulence.
Our dedicated funding managers, your personal small-business-loan experts, are here to help you navigate your business loan options and find the best financing solution for you.