Small businesses nationwide are struggling with the fallout from the coronavirus crisis. New research suggests that 50% of business owners have felt the effects, and nearly 40% report a decline in revenue. These negative trends were mainly chalked up to fewer customers visiting business locations, customers being more reluctant to make purchases, and customers having access to less disposable income.
Given the dire situation, the federal government is taking unprecedented action. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will allocate $2 trillion for relief initiatives. Included in the package will be a one-time payment to many Americans. Individuals making up to $75,000 a year will receive a $1,200 payment. Married couples making no more than $150,000 will get $2,400, as well as a $500 payment for each child in their family.
In addition to the personal payments from the relief package, there are multiple benefits for small businesses in the CARES Act. These include:
Businesses can qualify for the expanded Small Business Administration (SBA) disaster loan program as long as they don’t employ more than 500 people. As with other SBA loans, this financing is not actually funded by the agency. Rather, the COVID-19 loans are facilitated by the SBA, and the money comes from banks and various independent lenders. The key element is that the SBA guarantees a portion of the loan, which lowers lenders’ risk and makes them more willing to work with those who have less-than-stellar credit history.
SBA small business loans are intended to help small business owners overcome the negative effects of the coronavirus pandemic, so if you’ve struggled to make payroll, cover accounts payable, handle fixed debts, or pay your bills, you could qualify.
Finally, the Families First Coronavirus Response Act could also help you during this challenging time. This federal action bolsters unemployment benefits and creates rules for emergency paid sick leave impacted by the pandemic.
Multiple other SBA emergency loans for small businesses are available. While the details vary, they are all intended to help a business after physical or economic damage is caused by a declared disaster.
An SBA disaster loan can be used to repair or replace real estate, personal property, machinery and equipment, and inventory and business assets. But don’t go thinking that you could use one to expand your operations. The rules clearly state that it’s only intended to restore things to the way they were before the disaster.
Here’s a quick look at 3 different types of SBA disaster loans not directly related to federal action in response to the coronavirus crisis:
For those living in a declared disaster area and who have been victims of a disaster, there may be relief available through these loans. It’s worth noting that even though these loans are provided through the SBA, you don’t need to actually own a business to qualify.
If your business or organization is within a declared disaster area and sustained damage during that disaster, you can apply for one of these loans. Common examples include a hurricane or flood. These loans provide up to $2 million and are intended to help you replace or restore any damaged property.
This loan is specifically earmarked for business owners who employ a military reservist called to active duty. In these situations, the SBA funding can help your business with operating expenses.
While the coronavirus pandemic is impacting the entire world, other disasters are more regionalized. In order to qualify for SBA assistance for these types of physical disasters, you will need to live in a designated disaster area.
You can search for Presidential and SBA declared disaster areas by state and territory with the SBA’s online database. Recent examples include flooding in Tennessee and Mississippi, tornadoes in Arkansas and Louisiana, the Sable Ridge Condominium Complex Fire in Texas. All 50 states, Washington DC, and US territories are considered disaster areas eligible for coronavirus (COVID-19) relief.
Once a Presidential disaster is declared in your area, you need to first register with the Federal Emergency Management Agency (FEMA). To get started, call FEMA at 1-800-621-3362 or visit DisasterAssistance.gov.
After you’ve gotten a registration number from FEMA, you’re ready to complete your SBA online application. You’ll need to have the following information handy:
The SBA will review your application and then send an inspector to do an onsite review and to estimate the cost of your damage. The SBA makes these disaster loans a priority, so you can expect to hear back on their decision within a few weeks.
One thing to note is that the most commonly cited reason for delays in the process is an incomplete application. With this in mind, spend a little extra energy making sure every detail is correct before you click submit.
Also, don’t wait for any insurance settlements before you file your loan application. This common delay can cause borrowers to miss the filing deadline. If a settlement is made after you’ve applied, you can simply add the final insurance information at that time.