SBA Coronavirus Loans
We are currently experiencing one of the most devastating health crises of the modern age.
The COVID-19 outbreak has infected hundreds and thousands around the world and affected millions more. Global economies are entering into a recession, and small businesses are hit the hardest.
Are you worried about how your company will survive COVID-19? The Small Business Administration might be your saving grace.
If you’ve ever wondered, “what is an SBA disaster loan?”, now would be the best time to learn more about it. We’ll discuss that in this article and how it can help you survive these trying times.
About the SBA Coronavirus Relief Loan
In response to the coronavirus outbreak, the Small Business Administration (SBA) has released a special COVID-19 disaster loan program. It provides financial assistance to small businesses and non-profit organizations coping with revenue loss because of the coronavirus pandemic.
The SBA coronavirus loans offer financing amounts of up to $2 million to businesses suffering financial setbacks caused by COVID-19. The interest rate has been lowered to 3.75% for small companies, and 2.75% for non-profits just for this purpose.
How is COVID 19 Affecting Small Businesses?
In many ways, the COVID 19 crisis is having a more significant impact on small businesses than large corporations. The reason is that these small ventures may already have a problem keeping up with overhead during normal times. A pandemic strains this even further to its breaking point.
Depending on the nature of the business, most will see fewer customers walking through their doors, with most people staying at home in quarantine. There are also more employees getting sick, which can affect a company’s workforce and thus its ability to deliver quality service.
There are also problems with supply chain and inventory, as more and more businesses temporarily shut down. And to keep everyone safe, you need to spend more on cleaning and disinfecting products.
The combination of factors is making it hard for businesses to stay open during such a health crisis.
Who is Eligible for the Coronavirus Small Business Loan?
As the pandemic has already reached every corner of the United States, owners of any small business or private, non-profit organizations in all U.S. states and overseas territories can apply for coronavirus relief loans from the SBA. It also applies to any future SBA disaster assistance that’s caused by the COVID 19 outbreak.
Note that you still need to qualify for existing requirements set by the SBA. It means you need to be at the right size to be considered a small business (on average less than 500 employees—this varies with the industry). You should also have no access to other forms of private funding.
What can Coronavirus Relief Loans be Used For?
SBA coronavirus loans should be generally used to keep businesses running even during the outbreak. It helps mitigate the loss of revenue that will typically kill any small or medium venture.
SBA coronavirus relief loans can be used to settle any obligations the owner can’t afford to pay due to financial strains caused by COVID 19. It includes utility bills, account payables, and other debt payments. Rent payments can also be settled with this additional funding.
Coronavirus loans should also be used to help a business make payroll and give their workers a living wage during this health crisis.
Small Business Needs in the News
As small businesses continue to get slammed by a slow coronavirus-ravaged economy, the U.S. government has approved measures to keep them afloat.
President Trump has recently announced he will give tax relief for three months, to help business owners survive. He also pledged to fund employees who are on sick leave, in quarantine, or taking care of others due to the pandemic.
But the biggest news is the $50 billion funding that the U.S. government will inject to the SBA’s disaster loan program.
This SBA COVID 19 disaster relief funding will give small business owners access to a competitive, emergency loan. It will have super-low interest rates of 3.75%, compared to the usual 6.5 – 9% before the outbreak.
The loan package is just one of many initiatives of the Trump administration to help keep the U.S. economy running during the COVID-19 pandemic.
How to Apply for the SBA COVID 19 Disaster Loan
First, check with the SBA to see whether it has issued any disaster declaration in your area. With the COVID-19 pandemic, most if not all states are already eligible, so your area will most likely qualify.
Next, the SBA should have the application process specific to COVID-19 related loans available on their website. It’s your signal to start applying for an SBA coronavirus loan. Make sure you check and qualify for all requirements listed.
Lastly, simply wait for the status of your application. Updates are sent via email, so you should check those regularly.
SBA coronavirus loans are a godsend in this health crisis, but they’re not your only option. Schedule a one-on-one merchant funding consultation with L3 Funding and we’ll find ways to help your business survive COVID-19.