Small Business Loans and Resources to Get You Through COVID-19By My Service Depot on Tuesday, April 21, 2020
With the world in coronavirus-induced quarantine, business has dried up for many companies. These resources can help you navigate these uncertain times.
The coronavirus pandemic put millions of small businesses out of work, and while the government has designated most field service businesses as essential, your customers may have already started to show some hesitancy when it comes to taking on bigger projects. This means less revenue for you.
Of course, as a business owner, you still have to find a way to navigate the economic fallout from COVID-19. Things will return to normal eventually, but how do you keep your doors open right now? How can you keep employees on payroll when you can’t do an honest day’s work? The easiest way may involve taking advantage of the multitude of financial assistance programs for small businesses.
However, between the overwhelming number of programs and all the confusing rules involved in navigating them, you might not know where to start. Don’t worry! We’ve compiled a list to help you focus your efforts. Read about these 7 programs and apply for the ones that make the most sense for your business.
The CARES Act
In late March, the US Congress passed the CARES Act, which unlocked $367 billion in aid to small businesses. The act itself includes provisions for unemployment and personal stimulus checks, but you’ll want to explore the small business provisions.
This act gave government agencies and banks more freedom to lend money to small businesses. Think of the CARES Act as the key that unlocked a plethora of financing opportunities for your business.
Main Street Lending Program
The Federal Reserve partnered with the US Treasury for the Main Street Lending Program. Keep in mind that the Reserve hasn’t approved the program yet; it’s in the process of collecting feedback before rolling out the program. Once the program becomes available, small and medium-sized HVAC businesses can apply for a piece of the $2.3 trillion in available loans. Keep an eye on the news after April 16 so that you can apply when the program launches.
Small Business Administration Programs
The CARES Act softened the US Small Business Administration (SBA) qualifications for small business lending. As long as you’re affected by the economic uncertainty around COVID-19 (and the virus impacts your daily operations) you likely qualify for a loan.
Choose the SBA program that best fits your situation. Remember, when you need to apply, you won’t contact the SBA directly. Instead, connect with a bank that accepts these loans.
Paycheck Protection Loans
Do you have employees? The SBA will lend you up to $10 million (or 2.5 times your average monthly payroll costs) in a Paycheck Protection Loan. Paycheck Protection Loans protect the US workforce, providing a livelihood for your workers during the COVID-19 shutdown.
You qualify if you employ fewer than 500 people or if you’re a sole proprietor. These loans have ten-year terms with interest rates no higher than 4%.
The SBA will even forgive the loan if you maintain payroll for 8 weeks at your employees’ normal salary (you can’t reduce payroll or furlough employees). In this situation, the loan becomes a grant that you don’t have to pay back.
To get started, connect with an approved lender on the SBA website.
Economic Injury Disaster Loans
Receive up to $2 million in low-interest loans through the SBA with an Economic Injury Disaster Loan (EIDL) program. Interest rates are 3.75% and come with a maximum of 30-year terms. You can defer payments for up to 4 years, too.
Sole proprietors and small businesses with fewer than 500 employees qualify. If you take out a loan for less than $200,000, you don’t need a personal guarantee on that loan, either.
The great thing about Economic Injury Disaster Loans is that you can request a $10,000 cash advance. If you cover payroll or employee sick leave with that $10,000, the government will forgive that $10,000 as a grant.
Apply for Disaster Loan Assistance here. Have your EIN, gross revenue, cost of goods, and other financial information on hand to get through the process quickly.
Express Bridge Loans
The downside to many of these programs? Most of them already have a long waiting list. It could take weeks or months to get cash in your hand. Fortunately, SBA Express Bridge Loans give your field service business fast relief.
Get a loan from a local bank for up to $25,000 with this program. The purpose of a Bridge loan is to help you stay online while you wait for a larger loan, like Economic Injury Disaster, to process. You can repay this loan with funds from your EIDL once it posts, too.
You can access the SBA’s Express Bridge Loan process here. You must have an existing relationship with your lender to qualify. Approach the bank you use right now and ask if they offer Express Bridge Loans.
Private business loans and grants
Don’t like the idea of borrowing through the government? No worries. Some large businesses also offer grants and loans to small businesses.
- Facebook: The Facebook Small Business Grants program is giving a total of $100 million to small businesses across the world. It also offers a Business Resource Hub so you can get back on your feet faster.
- GoFundMe: The Small Business Relief Initiative and Fund will match $500 if you raise $500 for your business through GoFundMe.
- Verizon: The company’s Verizon Small Business Recovery Fund gives grants up to $10,000. It prioritizes grants to business owners of color.
If you’re having a hard time paying bills, approach your bank right now. Ask about deferring payments and interest for the next 2 months. See what options your bank offers.