How Small Business Coronavirus Loans Relieve and Support Business Owners?
As soon as the Covid-19 hit the world, the U.S. government has initiated the CARES act (Coronavirus Aid, Relief, and Economic Security Act) that has been signed into law by President Donald Trump. This fiscal policy brings about $376 billion for small businesses and American workers. The funds are monitored and facilitated by the SBA (Small Businesses Administration). They are currently offering various options for the undisturbed flow of businesses. These options vary according to the business type, structure, operational cost, facilitation cost, and a few other factors.
There are mainly 4 programs:
- PPP (Paycheck Protection Program),
- EIDL (Economic Injury Disaster Loans),
- SBA Express Bridge Loans
- SBA Debt Relief
Let’s learn more about these programs below:
Table of Contents
i) Paycheck Protection Program
As the name suggests, this loan facility gives you an opportunity to retain your workforce on the jobs during the pandemic crisis. Currently, the SBA is not accepting any more applications for this program but it has supported hundreds of small businesses and individuals to sustain their finances. It was a great facility that provided a chance to continue paying your employees in these tough times. The best part is that the amount that you lend through this program can be forgiven if you successfully retain all your employees and the expenses are utilized for the stated cause, which of course you are going to do if you are getting such financial aid.
ii) Covid-19 Economic Injury Disaster Loans
If there was no disaster in the year 2020, how would your business operate? SBA answers the question pretty generously by lending you the amount that is required to keep all your business operations running as if there was no pandemic at all. This program stands valid for many different small businesses including the Agriculture sector, NGOs, and other types of essential service providers across all the states of America. If your business is going through an interim deprivation of the revenue, you are eligible for the loan. As of October 2020, applications are accepted by SBA for this facility.
iii) SBA Express Bridge Loans
This is a fast method for businesses that are already registered with an SBA Express Lender. This loan can conveniently cover up your temporary revenue losses by handing you up to $25000. If a business has already applied for an EIDL and awaits the sanction of that loan, they are also eligible for this Express Bridge Loan, since express loans are designed to relieve you on an urgent basis and so it does what it says. This program can bridge the gap between your financial crisis and the flow of your revenues. Its turnaround is quite speedy and can be repaid in installments as well.
iv) SBA Debt Relief
Some businesses might have run into financial crises even before the pandemic and they already took some loans from other loan providers than SBA. For them, SBA will pay their 6 monthly loan amounts including the principal and interest. If a borrower has borrowed it from SBA especially under Paycheck Protection Program or EIDL then they are not eligible for this debt relief.
What about small businesses outside the U.S.?
Well, there are millions of small businesses in all parts of the world who have all been affected by the Covid-19 in one way or another. There are certain small businesses in the U.S. as well who would not want to apply for an SBA loan because of the interest and any other personal reasons. What options do they have other than loan facilities and how they can continue to retain their employees on the job? We will now discuss some possibilities suggested by Business leaders and experts.
The first and foremost step is to not give up on your hopes. You need to stay firm to keep things running smoothly. Running a small business has many different challenges even without the pandemic and small business owners need to learn to tackle those challenges effectively.
Be creative and innovative
Need is the mother of innovation. So, if you need to fulfill your fiscal losses you need to think out of the box. You need to think of the ways that you did not do before this crisis because thinking the conventional way is not going to help much. This problem was not there before and has occurred to you as a novel challenge. Update your service standards, try to go an extra mile for your customers, make them believe that you are still in the business, and not going down with the pandemic crisis. Update your branding strategies – may be time for you to go for an eye-catching graphics work or a new custom logo design –whichever can excite your customers, you need to go for it today.