We’ve had few clients asking about access to capital or funds to help get them through this time. Currently, the U.S. Small Business Administration (SBA) is offering low-interest loans to all small businesses in the U.S. up to $2 million dollars. These funds can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the virus’s impact. The interest rate is 3.75% for small businesses.
At this moment the SBA estimates the approval process to take anywhere from 2 to 3 weeks. Therefore, if you’re looking at something like this – best to start the process now. (even if you think you won’t need it). The link to the application is here: https://disasterloan.sba.gov/ela/Account/Login Note, this is a login page – if you’re not already registered, you’ll be required to register to start the process.
Now, in the meantime, Congress is going back and forth on a stimulus package that among many other things would enhance the SBA Loan program. The last bill (which was not passed) included a number of provisions aimed at debt relief and small business assistance. But knowing how this normally works, what’s finally voted upon may differ from what was initially proposed. That said, some of what was being floated includes:
- Lenders to provide complete payment deferment relief for borrowers with loans for a period of not more than 1 year
- A reduction of the fee to zero or near zero for approved applications
- Reduction of the principal amount of the loan for equal to the cost of maintaining payroll during March 1, 2020 – June 30, 2020 (this means if I took a loan for $100,000 and during the march through June time frame I paid $10,000, my principal amount of the loan would be $90,000 – no double dipping, if you are taking credits for employees under the Families First Coronavirus Response act, then it would not apply)
- No prepayment penalty for any payment on the loan made on or before December 31, 2020
Again, none of this has been passed yet, but Congress is currently in session working on it. We’ll keep you updated as we find out more.