Many small business owners in “non-essential” industries are finding themselves at a loss right now, thanks to the COVID-19 pandemic. As more and more states issue “shelter in place” orders, which closeschools andnon-essential businesses,and require residents to stayhome, the economy is greatly affected. Experts estimate we could be seeing shelter in place orders extended into the summer. For many small businesses, a months-long lack of income can prove fatal.
If you’re a small business owner who is affected by the coronavirus pandemic,there are resources available. Most notably, the federal government passed a $2trillion deal that will, in part, make it easier for small businesses to survive the downturn.
The federal relief program
Under the federal relief program, there are several types of loans available.Depending on how the costs are applied, you may qualify and be able to receive multiple loans—but check with your financial advisor beforedeciding how to proceed.
Full details are available at the U.S. Small Business Administration website, but the following is an overview of what’s available.
The Paycheck Protection Program. This fund is available for small businesses, nonprofits and other qualifying companies that meet the SBA’s small business or other applicable criteria, including self-employedindividuals, sole proprietors and independent contractors. You can apply for a loan of up to $10 million to pay for payroll and other eligible expenses. This is the largest small business loan available under the federal plan, and qualifies for loan forgiveness in certain circumstances. The government is working to make the loans available as soon as possible—perhaps as early as April 3, 2020—but it may take days to weeks to process the loans.
Economic injury disaster loans. This small business loan is grantedup to $2 million, and recipients can also apply for an advance of up to $10,000 for emergent situations. The advance doesn’t have to be repaid and may be available in as little as three days.
Debt relief. At this time, the SBA will also pay principal and interest fornew7(a) loans issued prior to September 27, 2020, and will pay principal and interest on current 7(a) loans for six months.
Express relief. If your small business already has a relationship with an SBA Express lender, there is a program to receive up to $25,000in loans with less paperwork, designed to help businesses stay afloat while applying for and receiving other debt relief.
What else you can do
In addition to debt relief, savvy business owners will use this time to make a new financial plan, determine where they can pivot their business to still bring in money(for example, many bars and restaurants are offering food and cocktail “home happy hours” where legal), and see if they can retrain staff for new positions while keeping them on the payroll.
One thing is for certain: COVID-19 is an unprecedented event in our lifetimes, and the team at Patin and Associates is here to help. Contact us today to find out how we can help your small business during this disaster.