The federal government’s paycheck protection program has provided small business owners with just under $ 800 billion in COVID-19 relief, according to the US Small Business Administration.
The PPP was closed on May 31, but as companies move forward in the takeover process, they may find a continued need for affordable financing. Here are some of the government funding options that are still available – and how to get them.
COVID-19 ECONOMIC INJURY DISASTER LOANS
If your business has lost money to the pandemic, you may be eligible for a COVID-19 economic disaster loan. The SBA can issue these loans until December 31 of this year, or until funds are exhausted, whichever comes first.
New changes to the program increased the maximum amount of loans available from $ 500,000 to $ 2 million, extended the deferral period to 24 months for all loans, and expanded the use of funds to include payment of the loan. non-federal and federal debt.
COVID-19 EIDLs are funded directly by the SBA – but unlike PPP loans, they cannot be forgiven.
However, businesses in low-income communities may be eligible for a COVID-19 EIDL advance of up to $ 15,000 that does not need to be repaid. Business owners can get an advance without getting a loan.
You can apply for a COVID-19 EIDL for free using the SBA’s online portal – and if your business is eligible for an advance, the SBA will contact you directly to submit a request.
SBA 7 LOANS (A)
While not unique to pandemic relief, SBA 7 (a) loans can provide affordable long-term financing to qualified businesses.
Recent updates to the 7 (a) Loan Program have removed the initial guarantee fee for loans under $ 350,000, effective September 2022. The maximum funding amount for the SBA Express loan – which offers a delay faster execution than standard 7 (a) loans – was also permanently set at $ 500,000, up from $ 350,000 before the pandemic.
However, with any type of SBA 7 (a) loan, you will likely need good credit, solid income, and a few years of business to qualify.
The challenge some businesses face is the inability to show historical cash flow due to the effects of the pandemic, said Jodi Rathbun-Briggs, senior vice president and director of loans at Greylock Federal Credit Union in Pittsfield, Massachusetts. , by e-mail.
“Borrowers should have well-thought-out recovery plans and in-depth discussions with their bankers regarding those plans,” she said.
The SBA offers a Lender Matching Tool on its website to connect potential borrowers with lenders within two business days. You can also contact a local bank in your community or a bank you already have a relationship with to see if they offer SBA 7 (a) loans.
LOCAL LOANS AND GRANTS PROGRAMS
States and cities continue to implement their own COVID-19 relief programs, as well as roll out new ones. The city of Chicago, for example, recently announced the launch of the Chicago Creative Worker Assistance Program, which provided $ 2.3 million in grants to artists and creators who have suffered lost income due to the pandemic.
Likewise, the California Rebuilding Fund has made loans to more than 700 small businesses and announced in September the addition of $ 56.5 million in available capital. The program provides low-interest loans to qualifying businesses statewide, distributing them through a network of community lenders.
In general, community lenders like Community Development Financial Institutions, or CDFIs, can be a great option for affordable financing, especially for traditionally underserved businesses, such as those operating in low-income areas, owned businesses. to minorities or belonging to women.
It’s worth looking at CDFIs from a geographic and industry perspective, says Randell Leach, CEO of Beneficial State Bank, a CDFI based in California, Oregon and Washington. If you’re a health food store, for example, there’s a good chance you’ll find a CDFI that focuses on that, he says.
Business owners can search state or city government websites and contact local representatives or industry groups to find grant and loan programs in their area for which they may be eligible. To find CDFIs in your area, or those that might be relevant to your industry, you can browse the official list of certified CDFIs on the Department of the Treasury’s Community Development Financial Institutions Fund website.
Organizations like SCORE and local Small Business Development Centers also offer access to free recovery resources and can help business owners identify potential funding opportunities.
DON’T FORGET PPP FORGIVENESS
More than 11 million PPP loans have been approved and, as of Oct. 3, around 7.5 million PPP loan cancellation requests have been submitted, according to the SBA.
Canceling the loan will not provide your business with additional financing. But it will ensure that you can invest the money you already have for the expenses rather than for the P3 loan payments. If you received a PPP loan, you have until the loan maturity date to request a forgiveness.