Help is on the way for small businesses to stay afloat financially through COVID-19.
The SBA Economic Injury Disaster Loan Program (EIDL) is available to help business owners. This program is offered by the SBA at https://www.sba.gov/funding-programs/disaster-assistance.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
Paul Bean, executive director of the Franklin County Development Council, offered the following points and tips about the program:
• There is no cost to apply and no obligation to take the funds if awarded.
• You may be able to obtain a $10,000 advance within three days.
• This is for businesses of 500 employees or less.
• The purpose is to cover payroll and accounts payable.
• If your loan is $25,000 or less, no collateral is required.
• If your loan is over $25,000 you may need to offer business assets but real estate will not be taken as collateral.
• The loan potentially covers six months of working capital needs.
• 30-year term with 12-month deferment of first payment (interest accrues from issue date).
• 3.75% for small business and 2.75% for nonprofits.
• Do not go to a bank for this loan, go directly to the web page above.
Businesses, including self-employed and independent contractors, nonprofits, veterans’ organizations and tribal business concerns, with less than 500 employees are eligible.
Banks already approved to make SBA 7(a) loans are in a position to begin making loans once form documents are released by the administration.
There is no requirement for collateral or personal guarantees. In addition, borrowers will not be required to show that they cannot obtain financing elsewhere.