3 Loans for Small Businesses Hit Hardest by Coronavirus
Small Business Loans Help During Coronavirus Shutdowns
With the numerous forced business closures around the country due to the coronavirus COVID-19 emergency, the US Government is recognizing the economic disaster in the works for these business owners. Especially hard hit by revenue loss are those in the entertainment and travel industries including bars, restaurants, night clubs, concert venues, hotels and theme parks. Main street retail shops have declining walk-in traffic and many dental and other medical practitioners are closed for business.
Due to the many local emergency regulations being instituted to curtail the spread of the coronavirus, many of these establishments have been shut down partially or entirely. Just in time for St. Patrick’s Day, the State of Florida ordered that all bars in the state beginning March 17 at 5 pm must close for the next 30 days. Taking it a step further in St. Augustine, Florida, the mayor announced that all restaurants in the city may only operate at half capacity and are strictly banned from selling alcohol for thirty days.
There is quick relief coming for these businesses in Florida and elsewhere in the US experiencing loss of revenue due to the emergency closures. The Federal Government has authorized the Small Business Administration to provide up to $7 billion in low-interest business loans to small businesses located in designated economic injury disaster areas
Small Business Administration Loans
Small Business Administration Loans
At interest rates of 3.75% for small businesses with no other credit options (businesses with credit available are not eligible) and 2.75% for non-profits, eligible businesses can receive working capital loans of up to $2 million so that they can remain solvent while they are experiencing a temporary loss of revenue.
Once granted, loans may be used to pay bills that can’t be paid due to the disaster’s impact including fixed debts, payroll and accounts payable.
Through the SBA, long-term repayment plans are available up to a maximum of 30 years. You can learn more about eligibility and requirements from the recent SBA news release.
The current list of States that have been designated eligible for the SBA’s Economic Injury Disaster Loan program are:
California, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Indiana, Maine, Massachusetts, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, Utah, and Washington.
The State of Ohio has also applied for designation as an economic disaster zone due to the coronavirus and is expecting a response on eligibility for their small business owners as of Friday, March 20.
Small businesses in these states that qualify can apply for a loan online at the SBA Disaster Loan Assistance website.
Another $1 Trillion in Relief from the Federal Reserve?
Another $1 Trillion in Relief from the Federal Reserve?
Recognizing the impending need, Sen. Mark Warner of Virginia proposed that Congress call on the Federal Reserve to all aid in supporting small businesses due to the COVD-19 outbreak. His proposal includes $1 trillion in federal financing and potentially easier terms and requirements than are found through the SBA.
Warner’s plan would require that businesses keep their employees on the payroll and is also considering restrictions to executive compensation. During the crisis period, borrowers might receive either loan forgiveness or an interest holiday.
Warner’s plan is just now being drafted and will require consideration and approval in both chambers of the House before potentially arriving on President trump’s desk for signature. We’ll be keeping an eye on this one as it may be necessary to provide the additional relief to keep our main street businesses open.
Get a Business Loan from Friends & Family
Get a Business Loan from Friends & Family
For smaller loan amount needs, borrowing from a family member may provide the quickest path to obtaining the funding and the most favorable repayment terms. When transacting a loan with a friend or family member, be sure to keep it official and use a loan agreement template to document the loan and repayment terms.
You may eventually decide to reach out to the SBA or take advantage of other Federal opportunities that arise but, until then, friends and family may be the life raft that keeps you afloat!