Understanding the SBA Loans

The Funding Options to Assist with Hardships felt from the COVID-19 Pandemic

The Funding Options to Assist with Hardships felt from the COVID-19 Pandemic

While most of the States have some sort of restrictions on business essential or not, a lot of business are hurting while the COVID-19 (Coronavirus) pandemic is still running rampage throughout the U.S. While the hope is that all business would be able to survive this but as we have seen some business have already fallen like Punch Bowl Social, who has closed all 19 locations has defaulted on their loans and is looking at foreclosure.  

SBA (Small Business Administration) which is a U.S. Government agency backs small business loans amongst other things has setup some Coronavirus Relief Options to help small businesses survive this pandemic. Some of these loans don’t have to be paid back according to the SBA website.  

What does each of these funding options do? How do you qualify? I suggest consulting with your CPA before applying for any loans including these SBA Funding Options. Make sure that the funding makes sense, and you understand fully the restrictions the SBA has and the reporting you need to submit to ensure you get the best that they have to offer.  

The four funding options that the SBA has set up for small business are the following:

  1. Paycheck Protection Program
  2. EIDL Loan Advance
  3. SBA Express Bridge Loans
  4. SBA Debt Relief 

Each one of these loans has different restrictions and different qualifications to receive the funding. 

Paycheck Protection Program

This loan is an incentive to keep your employees on the payroll through the COVID-19 pandemic. This loan can be forgiven if the loan is used for payroll and you keep all employees paid for eight weeks. The money can also be used for rent, mortgage interest, and/or utilities. 

Where Do You Apply?

You can apply through any SBA 7(a) lender or any Depository Institution, Credit Union, Farm Credit System that is Federally insured and participating in the programs. And you can apply for this loan from April 3, 2020, through June 30, 2020

Who Can Apply?

Small Business is considered mainly all employers who have less than 500 employees, with a few exceptions. This also includes sole proprietors, (independent contractors and self-employed persons), private non-profits, and veterans’ organizations effected by the COVID-19 pandemic.  

Loan Forgiveness Details

The loan can be fully forgiven if you use 75% of the amount for payroll cost and the balance of the funds is used for interest on the mortgage, rent, and utilities. Payments on the loan are deferred for six months and collateral and a personal guarantee are required.  


If you are unable to follow the forgiveness guidelines the loan is due in 2 years and the interest rate is 1%. 

Also, the bank or government agencies can’t charge you any fees.  


If interested in applying
click here

EIDL (Economic Injury Disaster Loan) Loan Advance

This advance is up to $10,000 that is to provide economic relief to a business struggling from the COVID-19 pandemic. According to the SBA website, this loan advance does not have to be paid back.  

Who Can Apply?

Small Business is considered mainly all employers who have less than 500 employees, with a few exceptions. This also includes sole proprietors, (independent contractors and self-employed persons), private non-profits, and veterans’ organizations affected by the COVID-19 pandemic.  


To Apply 
Click Here

SBA Express Bridge Loans

This program allows small businesses who have a current relationship with an existing SBA Express Lender to access up to $25,000. But unlike the EIDL and Payroll Protection Program this loan is supposed to be paid back.

Who Can Apply?

Small Business is considered mainly all employers who have less than 500 employees, with a few exceptions. This also includes sole proprietors, (independent contractors and self-employed persons), private non-profits, and veterans’ organizations effected by the COVID-19 pandemic.  

 

If interested in applying for this loan you will need to talk to your SBA Express Loan Lender.  

SBA Debt Relief

This funding option will pay the principal, interest, and fees for any current 7(a) 504, and microloans for a period of up to six months These loans are SBA loans that have been funded before September 27, 2020.  

 

This funding option will also cover loans that are considered in “regular servicing” status as of March 1, 2020, will provide automatic deferral through December 31, 2020.  

 

To apply for the SBA Debt Relief, you will have to talk to your SBA lender.  

 

These are some great options that have been set up by the SBA to help you and your business during the COVID-19 pandemic (Coronavirus). You’ve worked hard and built a great business use these options if they make sense to help keep you operating during this pandemic. The Paycheck Protection Program is great for those who have employees. 

Being a small business owner, I know the difficulties of hiring and retaining great help, this is a great way to do it. 

 

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