Help for small business harmed by the COVID-19 pandemic

Cash-strapped small businesses may find a lifeline in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the economic stimulus act that significantly expanded existing U.S. Small Business Administration (SBA) programs. 

The CARES Act creates new loan programs and loosen some requirements of existing SBA loan programs. These programs are designed to give small business access to funds quickly, to enable businesses to retain employees and to keep the business running during the crisis.  In some instances the loans might be converted to grants not requiring repayment.

For further information, see Understanding the Senate’s $2.2 Trillion Stimulus Bill.

The CARES Act aims to streamline the application process. However, some time is required for banks and the SBA to gear up to implement the programs. Our understanding is that banks are already planning to ramp up quickly, but it may be a one- or two-week process. Due to the unprecedented need in the business community for these funds, there’s likely to be a huge influx of applications for banks and the SBA to process while their staffs also work remotely or are re-entering an office work environment. As with any lending program, applicants should anticipate it will take time to complete the application and supporting documentation, and await a decision and closing documents. The program is designed to move quickly, but only time will tell how quickly. CARES does provide for $10,000 of advances within three days after the SBA receives an application, which is not dependent on whether the application is approved.

What to do now? 

A small business contemplating a loan to provide financial relief should:

Immediately take steps to preserve funds while awaiting the loan. Loan funds other than the advance will not be available immediately. See The COVID-19 Financial Crisis: A Survival Guide.

Assess which loan or grant program is best for your business:

• Is it a “small business” for purposes of these programs?
• What are the loan and grant program options?
• Compare requirements (purpose, collateral, requirements, conditions) to pick the best program.
• Put in order company records, including accounting, payroll, and operations.
• Pinpoint how and why the COVID-19 pandemic harmed the business operations.

Then, apply for a loan or grant.

Available loan and grant programs through the SBA

• Paycheck Protection loans
• Grants
• Economic Injury Disaster loans 
• SBA Express loans
• SBA 7(a) loans
• SBA 504 loans
• Payment deferrals for non-Paycheck Protection loans
• Mid-size company loan program
• Economic Stabilization loans