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Updated: Apr 6, 2020
Make haste. That is the sentiment of business owners everywhere while it’s anything but business as usual as the COVID-19 scare continues to wreak havoc on the global economy. With phenomenons like social distancing, mandatory store closings, and household lock-downs taking hold, a new normal in society – if only for a while – has suddenly emerged.
Support for small businesses, especially an immediate lifeline, can seem like a pipe-dream. But given that small businesses fuel some 44% of the American economy, business leaders and government officials alike are stopping at nothing to save the American dream. The response from both private and public sectors is intentionally focusing on aiding businesses like yours during these tumultuous times.
No matter how you slice it, business loans are not instant. They can’t be to ensure they’re safe and secure for both lender and customer. But some issuers are faster than others. The result is access to capital that can keep you afloat.
There is no shortage of small business funding options, so it’s just a matter of finding the product that fits your needs. Given that the government has thrown everything but the kitchen sink at this economy, the tricky part is navigating your choices and knowing where to turn. Let’s try and simplify things by breaking down the different COVID-19 small business support loans available.
If your business is among the many to be impacted by COVID-19, you may qualify for a disaster assistance loan from the SBA. These are low-interest federal disaster loans designed to provide support for your small business with working capital while cash flow is beyond tight, and insolvency is staring you in the face. To qualify for this type of emergency loan, you must employ 500 or fewer people. Business owners can borrow up to $2 million.
You can direct the capital toward many purposes, including paying existing debt, payroll, and other expenses that are left unpaid as a direct consequence of coronavirus. The loan is long-term in nature, with a repayment period of up to 30 years, and has a fixed interest rate of 3.75%. Here’s a link to the application. The help isn’t immediate, as it will take up to three weeks for the SBA to decide on your application. But once you’re approved, you can receive an initial installment of $25,000 in a matter of days.
Another program is an Economic Injury Disaster Grant. It’s part of the disaster relief loan program, and qualified businesses can receive up to $10,000 in a one-time grant. The emergency nature of the grant means you can have the funding in your account in as little as three days.
The SBA loans are only one piece of the COVID-19 small business support puzzle. Another big part is the Paycheck Protection Program (PPP), which falls under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Banks like Chase are supporting the program, and online lenders like Funding Circle are approved to participate. For its part, Funding Circle will offer PPP loans from April 10 (subject to SBA approval, Funding Circle and our partners will start processing these applications) through June 30. The beauty of turning to an online lender like Funding Circle for relief is you are much more likely to obtain immediate loan support given the tech-savvy and online nature of fintech companies.
The PPP’s whole purpose is to help you keep employees on the payroll. It’s an expansion of the SBA’s 7a program. There’s no requirement for collateral to secure the loan, which should cut down on the time and paperwork involved. Overall, the amount provided via this loan support program could be up to 2.5 times your average monthly payroll costs. Payments defer for at least six months, and the interest rate won’t exceed 4%.
Many cities and states are also providing support for small businesses in the way of loans and grants that could be a lifeline. To name a few, these include
You might also find unexpected relief during the COVID-19 crisis from your local community. Payment platforms like Square are helping by supporting gift-card sales online. Many people would like to continue supporting small businesses throughout this challenging time. By purchasing gift cards, they can help business owners like you to keep the cash flow coming. The best part is that community relief comes immediately through online payments.
In return for this COVID-19 small business support provided to you, your business might offer free how-to videos about the product or service you provide to help your customers get by until things open up again. Teach someone how to give a haircut or cook a meal. Even Burger King is sharing their trade secrets by publishing a how-to for making a Quarantine Whopper.
Another way that the government is helping is by giving business owners an extension on paying taxes. The Department of the Treasury and IRS have given businesses an extension to pay Uncle Sam by deferring taxes on up to $10 million for 90 days, until July 15. It’s one less bill for a while that could provide businesses much-needed immediate support.
Funding Circle, the largest small business lending fintech is one of a few non-depository online lenders in the United States that was recently approved to provide Paycheck Protection Program loans. We offer the PPP application in four languages: English, Spanish, Mandarin and Hindi.
Apply for the Paycheck Protection Program with us today to help you with the expenses that may be peeling up. Remember: We’re in this together.
Jessica Holcomb is the Content Marketing Manager at Funding Circle, specializing in small business marketing and social media. She has a degree from the Fashion Institute of Design and Merchandising. Prior to Funding Circle, Jessica was a Marketing Manager at a successful social games company and a freelancer for many small businesses in the Bay Area. Her work can be seen in top retail, gaming, and financial small business resource sites.