How small businesses can access loans during the COVID-19 crisis

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It’s only been a few weeks since work and life changed radically, thanks to new social and physical distancing requirements. In that short time, however, many businesses across the country are coping with the impact of the coronavirus pandemic. 

While some businesses remain open as essential businesses, many companies are facing an extreme slowdown in activity and revenue, which makes it difficult to make payroll and cover other expenses. 

The NFIB Research Center recently released the results of a new survey that examined how the coronavirus outbreak will impact small businesses. The findings show that owners are concerned about how future disruptions will affect them if the outbreak continues to escalate and the shutdown of non-essential businesses continues for months, rather than weeks. 

Of those small business owners who note they are not currently impacted, 43 percent believe their business will be adversely impacted if the pandemic continues to spread over the next three months. The businesses that are currently impacted in a negative way say they are experiencing issues like supply chain disruptions, slower sales and sick employees. 

Whether the financial need occurs now or in the coming weeks, some small businesses are seeking assistance to maintain their operations and recover when this pandemic ends. Although specifics of the financial relief from the federal government are still being hammered out, there are some places small business owners can go to for emergency loans right now:

Current federal emergency financial assistance

The U.S. Small Business Administration (SBA) is offering up to $2 million in Economic Injury Disaster Loans for small businesses and private, non-profit organizations that are impacted by the pandemic. 

These are low-interest loans (3.75% for small businesses and 2.75% for non-profits) that provide working capital for small businesses to keep going. The loans give these businesses a way to offer financial help to their employees and bridge the cash flow gap caused by depleted revenues. They can also be used to pay fixed debts, make payroll and accounts payable, and cover any other expenses that can’t otherwise be paid because of the impact of the coronavirus.  

The SBA offers long-term repayments to ensure the payments are affordable and realistic in light of the business recovery process. The loans are good for up to 30 years, with terms calculated on a case-by-case basis in terms of each borrower’s ability to repay.

More assistance is coming from the SBA and federal government, but this is a starting point. Begin the process with the SBA’s COVID-19 resource page, which provides more information about eligibility and applications.

Another federal option in the works is the Main Street Grant program. These are proposed grants that would come from the Treasury Department and help all types of businesses and nonprofits. The funds could be used for payroll and other business expenses. 

State and city emergency aid

Many states and cities are beginning to offer individual emergency aid. Each state has its own strategies for helping local small businesses. 

Here are are some examples of emergency aid on the local level: 

  • In Chicago, small businesses can apply for low-interest loans through the Chicago Small Business Resiliency Loan Fund
  • The City of Los Angeles has a Small Business Emergency Microloan Program that offers loans of up to $20,000 with zero to low-interest rates. 
  • Salt Lake City offers an emergency loan program where local businesses can also receive similar microloans with no interest. 
  • NYC Small Business Services is giving grants to businesses with fewer than five employees. These grants will cover 40 percent of payroll expenses for two months. Those businesses with less than 100 employees who experience revenue declines of 25 percent or more can qualify for no-interest loans of up to $75,000.

There are many more state and city examples. Check the websites for both the state and city where your business operates for more information. 

Help from private companies and nonprofits 

Private companies and nonprofits are also contributing to emergency aid for small businesses despite their own economic impact from the coronavirus. 

  • Amazon has a $5 million Neighborhood Small Business Relief Fund for cash grants to Seattle small businesses.
  • JPMorgan has pledged up to $50 million in aid to consumers and small businesses.
  • The Restaurant Workers’ Community Foundation created a COVID-19 Emergency Relief Fund for small businesses and their workers.
  • Yelp is offering $25 million in relief for independent restaurant and entertainment businesses. The relief includes free advertising to encourage consumers to order delivery from these establishments. 

More help on the way

Financial assistance programs are being created to help small business owners with expenses like benefits, payroll and more, and this is just the beginning. We will continue to provide updates on how you can keep your business operational during these extraordinary times.

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