4 Funding Options for Small Businesses During the COVID-19 Outbreak

closed sign in the window of a small business
Apr 14, 2020
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It’s no secret that COVID-19 has greatly affected small businesses. To provide some much needed relief, the US government has implemented four new temporary programs for funding.

1. Paycheck Protection Program

The Paycheck Protection Program (PPP) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. What’s important to know is that all loan terms will be the same for everyone.

The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made. Also, employee compensation levels are maintained. Click here to read our article that lays out this plan.

2. EIDL Loan Advance

The Economic Injury Disaster Loan provides up to $10,000 of economic relief to businesses who are losing revenue because of the COVID-19 crisis. The best parts about this loan are that the funds will be made available within days of a successful application, and the loan advance does not have to be repaid.

This loan is for small businesses with less than 500 employees including sole proprietorships, independent contractors and self-employed individuals, private non-profit organizations (or 501(c)(19)) and veterans organizations. Businesses in certain industries with more than 500 employees may still qualify.

Click here to learn more or here to apply (the application will take a little over two hours to complete).

3. SBA Express Bridge Loans

Businesses that are waiting for an Economic Injury Disaster Loan (EIDL) and have a business relationship with an SBA Express Lender can quickly get up to $25,000 with the SBA Express Bridge Loan. The best part is that this loan will be repaid in full or in part by the amount provided by the EIDL.

This loan does require several forms to be filled out to apply:

  • SBA Form 1920
  • SBA Form 1919
  • SBA Form 159
  • SBA Form 601
  • IRS Form 4506-T and IRS Transcript or Equivalent
  • SBA Form 912

Click here to learn more.

4. SBA Debt Relief

This SBA funding option will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months and new 7(a), 504, and microloans issued before September 27, 2020.

Businesses with current SBA Serviced Disaster Loans that were in “regular servicing” status on March 1, 2020 will get automatic deferments through December 31, 2020. This means no payment will be due, but interest will continue to accrue on the loan. Also note:

  • 1201 monthly payment notices will still come in the mail, but no payment will be due.
  • Businesses who want to take advantage of this relief will need to cancel any pre authorized debit (PAD) or recurring payments on their loan.
  • Businesses can continue to make regular payments. SBA will apply the payments like normal.
  • After the December 31, 2020 deferment period, borrowers will be required to make regular payments again.

If you have questions about your loan, you can reach out to your Loan Services office:

Birmingham Disaster Loan Servicing Center:
Phone: 800–736–6048
Email: [email protected]

El Paso Disaster Loan Servicing Center:
Phone: 800–487–6019
Email: [email protected]

For more information, click here.

Source: US Small Business Administration, sba.gov/funding-programs/loans/coronavirus-relief-options