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Updated: Mar 31, 2020
If your business has been hit by the COVID-19 pandemic, you’re not alone. Millions of businesses across sectors of the economy are fighting for their survival in a race against the clock. Even if you have a cash buffer to tide you over in an emergency, chances are those reserves are running thin. Most business owners only have enough cash flow to last for 27 days to pay the bills.
No doubt like many other business owners you’re wondering where you can get COVID-19 business help. Fortunately, both the public and private sectors are rising to the occasion so you are not without a lifeline.
The U.S. Congress has passed what’s been dubbed the CARES Act, which as the name suggests is designed to help Americans including business owners like you. Of the $2 trillion in subsidies that the government is doling out during this time of crisis, some $350 billion is earmarked for small businesses with no more than 500 employees – whether they’re full-time, part-time, or some other basis. Surely there is something in it for you, so let’s break it down.
Chief among the features of the government’s COVID-19 business help is the Paycheck Protection Program. It’s designed to reward business owners for keeping employees on the payroll. There are numerous facets to this program. In addition to cold hard cash, you can seek help in other ways.
Under this COVID-19 business assistance program, Uncle Sam is offering payroll tax relief to employers in the way of a deferral for 2020. This would free up some cash for business owners like you. While it doesn’t take you off the hook entirely as you’ll have to repay the funds in installment waves through 2021 and 2022, it could provide much-needed relief during this time of economic hardship.
The Paycheck Protection Program also includes 100% government-guaranteed loans for small business owners who keep the payroll going for up to eight weeks throughout the coronavirus crisis. The SBA-backed loans are delivered by banks, credit unions, and other lenders. The U.S. Treasury is preparing a policy that would let all FDIC-insured banks participate in SBA programs.
Those business owners who are able to do so will see forgiveness on the portion of the loan that they direct toward certain costs. These include payroll expenses, interest on your mortgage or rent payments, and keeping the lights on (utility payments) — all of which would be forgiven under this COVID-19 business help initiative in exchange for keeping your workers employed. So to be clear, you won’t need to repay this portion of the loan because Uncle Sam will reimburse the banks for you from the stimulus money. But be ready to have documentation to provide your lender.
Even better, the Paycheck Protection Program goes back in time to cover you starting Feb. 15, 2020. This means employees who were already laid off could be rehired.
Further COVID-19 business assistance is available via the SBA’s Disaster Loan program. This initiative is delivering low-interest working capital loans of up to $2 million to offset lost sales. Features of the disaster loans include a fixed rate of 3.75%, maximum term of 30 years. Meanwhile, the SBA has lifted the collateral requirement due to the emergency nature of these loans, meaning you won’t have to put up your real estate or equipment to qualify.
The not-so-good news is that we’re talking about the government, which isn’t known for being fast. It could be 30 days from the time you are approved until you see the funds in your account. Considering that time isn’t currently on the side of business owners, you might want to explore other options to receive COVID-19 business help.
The desperate nature of the COVID-19 crisis has triggered a response from across corporate America. The technology community has been out front during the outbreak, with tech entrepreneurs like Jack Dorsey and Mark Cuban both doing their part.
Jack Dorsey, CEO of payments platform Square, unveiled a website called Give and Get Local. It gives consumers the opportunity to support sellers in their area on the Square platform by purchasing a gift card to increase cash flow for the business owner. If you are on Square, you can use social media to promote the idea to your network.
Dorsey is also calling on the U.S. government to allow modern technology to facilitate the delivery of promised stimulus checks to Americans so that people won’t have to wait for weeks on end for their money.
For his part, Mark Cuban is looking for an FDIC, SBA-preferred lender bank to partner with him to deliver stimulus checks to people faster than the government’s three-week timeline. The sooner these funds can get into your hands, the sooner you will find COVID-19 business help.
Google is also stepping up in their COVID-19 business assistance efforts by offering $340 million in ad credits to business owners. This could go a long way during a time in which only essential businesses are open in some states. To qualify, you need to have maintained an active Google Ad account over the past year.
Online lenders are also ramping up their efforts to offer COVID-19 business assistance. Funding Circle, for instance, is approved to participate in the Treasury Small Business Interruption Loan Program under the CARES Act. Online lenders that are qualified can choose to participate in the aforementioned Paycheck Protection Program, offering loans that are 100% guaranteed from default by the government so that more businesses can gain access to funding. With online lenders like Funding Circle involved, it will slash the time required to get funds into the hands of business owners and provide much-needed COVID-19 business help.
Now you have more information about how small business loan climate looks like during COVID-19. Contact Funding Circle to learn more about our business financing options. We can connect you to Paycheck Protection Program loans offered through the SBA.
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. CLICK HERE.
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.