As the economy endures an unprecedented period of upheaval, small businesses across the nation are facing challenges on every front. Drops in sales have put a hole in balance sheets and forced small businesses to make some tough decisions. However, solutions have arisen to help alleviate recent economic setbacks. Private companies and governments at every level have created or expanded programs to help small businesses get through these tumultuous times. Here are some tips, programs, and resources that you can use to keep your business open and your staff employed.
Small Business Administration
The Small Business Administration (SBA) has the authority and funding to help small businesses recover from financial setbacks. Exploring the opportunities this agency provides should be your first step in researching available resources. There are four main components offered by the SBA, each serving a specific function in assisting small businesses.
Economic Injury Disaster Loan Emergency Advance
The Economic Injury Disaster Loan Emergency Advance program provides relief funding to small businesses, private nonprofit organizations, and veterans organizations. If your business is located within the United States and employs 500 or fewer people, the only step you have to take is submitting an application to the SBA. If eligible, your business will receive up to $10,000 in relief funding. These funds are considered an advance on an Emergency Injury Disaster (EID) loan and do not need to be paid back, ensuring that you will have no outstanding debts after applying.
SBA Express Bridge Loans
If your business has an existing relationship with a registered SBA Express Lender, you are eligible to apply for an express bridge loan of up to $25,000. These funds can be used at your discretion. However, it may be beneficial to use this loan until you receive your direct EID loan. The express bridge loan can be paid off with proceeds from your EID loan, and you can apply for an SBA Express Disaster Bridge loan to keep you afloat while you wait for your EID funds to be disbursed.
Debt Forgiveness
As part of its recovery response, the SBA is helping to reduce the debt burden of small businesses. If your business has a current 7(a) or 504 loan with the SBA, the Administration will automatically pay the principal, interest, and fees on your loan for a period of six months. This program also covers new 7(a) and 504 loans issued prior to September 27, 2020, so you still have a few months to benefit from this leniency.
Paycheck Protection Program
Created as part of the CARES Act, the Paycheck Protection Program is intended to prevent small businesses from having to lay off staff due to extenuating financial circumstances. Any companies that meet the SBA’s size standards (including sole proprietors, independent contractors, and self-employed persons) can apply and receive a loan of up to $10 million at very favorable terms. Not only do these loans carry an interest rate of only 1%, but all loan payments will be deferred for six months. Furthermore, the loans can be forgiven entirely for businesses that keep all their staff employed for at least eight weeks and that use the money on payroll, rent, mortgage interest, and utilities.
Alternatives
There are many other avenues outside the SBA for finding additional financial resources to aid your business. A host of state and local governments have created programs to assist community businesses through the distribution of loans and grants. Consider seeking out funds and credit unions dedicated to helping small businesses, and contact your lenders to see if they are willing to adjust the terms of your loans. You can also reach out to your customer base directly and ask them to support their local businesses remotely by purchasing gift cards they can redeem once you are able to reopen your doors.
All for One
The current financial climate has caused stress for many business owners. Thankfully, the SBA and other programs have established a means of stability for those who need it most. Researching these available options to aid your business provides the security and assurance you deserve in these turbulent times. There is a light at the end of the tunnel, and these resources are here to help you reach it.