For those that are struggling through extremely difficult times and find themselves having to make some tough decision, there are loans being offered by the federal government under the Small Business Administration (SBA).
Below are some options at the federal and state level that you may want to consider:
SBA 7(a) loan -Payroll Protection Program
SBA Economic Injury Disaster Loans (EIDL)
SBA 7(a) loan – Payroll Protection Program
This loan is designed to incentivize employers to keep employees on the payroll. By doing so, the employer will be forgiven of any of the debt incurred under this loan used to pay employees, commercial rents, commercial mortgages, utilities and independent contractors paid out during the covered period, which is February 15, 2020 through June 30, 2020.
The maximum amount of the loan is based on either the average monthly payroll during the period of February 15, 2019 through June 30, 2019 or if the business was not in operation during this time the average of the monthly wage from January 01, 2020 through February 29, 2020 times 2.5. So if your average monthly payroll was $10,000, you would be entitled to $25,000.
The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation. To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
SBA Economic Injury Disaster Loans (EIDL)
Per the SBA website:
The APPLICANT must establish that the claimed economic injury is substantial and is a direct result of the declared disaster. For EIDL, the applicant must establish the claimed economic injury is substantial and is a direct result of the call-up of an essential employee. Substantial economic injury generally means a decrease in income from operations or working capital with the result that the business is unable to meet its obligations and pay ordinary and necessary operating expenses in the normal course of business.
The CARES Act expands eligibility to small businesses and requires that loans because of the COVID-19 (coronavirus) be made before December 31, 2020 and shall waive any personal guarantee on advances and loans below $200,000, that the applicant be in business for the 1-year period before the loan.
This loan will be based on the applicant’s credit score or use an alternative appropriate method for determining the applicant’s ability to pay.
It also establishes an emergency grant to any eligible business that has applied for the EIDL loan to request an advance of no more than $10,000 which the SBA must distribute within 3 days. A great way to get a cash infusion for those businesses in need.
Here’s some links to applications and more information on the loan.
https://covid19relief.sba.gov/#/
https://www.sba.gov/sites/default/files/files/serv_da_all_loanapp_5_0_4.pdf
Florida Disaster Loans
Small businesses can borrow up to $50,000. Loan interest rate will be interest-free for one year, and 12% per annum for any unpaid balance until the loan balance is repaid in full. Applications for this loan will be accepted through May 08, 2020.
This may be a great option for those looking for quick funds.
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