Financial Assistance for Businesses Suffering as a Result of COVID-19
The novel Coronavirus (COVID-19) has changed the way most of us are living. Offices have been moved to living rooms, restaurants and stores have been closed, events have been postponed, and conferences have gone digital. For many people, and most small business owners, COVID-19 is causing serious financial distress.
As a result of COVID-19’s impact on the U.S. economy, the federal government is offering emergency financing to help those who have been adversely affected. The Small Business Administration Disaster Relief Program and the Paycheck Protection Initiative will help tens of thousands of U.S. businesses (and other qualified entities) financially impacted by the global pandemic.
SBA Disaster Relief Program
On March 6, 2020, the Economic Injury Disaster Loan Program was expanded to include the SBA Disaster Relief Program, providing financial assistance to authorized businesses and organizations that have experienced economic hardships as a result of COVID-19.
- Up to $2 million (per loan) to small businesses and private, non-profit organizations located in U.S. territory
- Proceeds may be used for paying fixed debts, payroll, accounts payable and other bills that can’t otherwise be paid due to the economic impact of the Coronavirus
- No fee
- No loan forgiveness
- Interest rate of 3.75% per annum (2.75% per annum for non-profits)
- Small businesses as dictated by SBA standards
Paycheck Protection Initiative
On March 27, 2020, the U.S. Congress approved the Paycheck Protection Program to provide cash-flow assistance through federally guaranteed emergency forgiveness loans to small businesses, nonprofits, and organizations that are struggling during this economic crisis.
- Up to $10 million (per loan) to qualified businesses, sole proprietorships, independent contractors and self-employed individuals.
- Proceeds may be used for payroll/employee benefits of U.S.-based employees, operating costs (rent, mortgage interest payments, utilities, interest on previously incurred debt) for ongoing operations throughout COVID-19 disruptions
- No fee
- Loan forgiveness is available
- Interest rate not to exceed 4%
- Businesses may not exceed 500 employees*
Organizations that qualify for both the SBA Disaster Relief Program and the Paycheck Protection Program will have to choose which program is better for their business. Nevertheless, any loan made after January 31, 2020 under the SBA Disaster Relief Program will be eligible to be refinanced under the Paycheck Protection Program.
If your business could benefit from assistance during this time, please visit these valuable resources:
- SBA Application
- Lender match tool
- Local assistance
- Reach SBA disaster assistance customer service at 1-800-659-2955 or email@example.com
*Affiliation rules waived for (i) businesses assigned a NAICS code starting with 72 (hospitality and food services), (ii) franchises, and (iii) SBIC portfolio companies.