In the wake of the pandemic where many giants declared themselves bankrupt, there is no doubt that small business owners are also having a hard time keeping up with their respective businesses. However, in America, we believe in lifting each other, and the Federal Government is doing its best to support everyone and help them to win the fight against these historic crises.
If you are reading this article right now and you also happen to be a small business owner, we have brought good news for you. To help your business grow in times like this, the small business administration agency is giving out small business loans.
If you know about it already, then what are you waiting for, but if you don’t then here are some important pieces of information regarding SBA loans and how to apply for small business loans under the coronavirus stimulus bill.
However, before we dive into the details, let us give you a quick overview of SBA loans under the coronavirus stimulus bill.
SBA loans for small businesses under the coronavirus stimulus bill
SBA is a small business administration agency, which connects borrowers to lenders and makes the loans easy for both parties. However, during the pandemic, SBA has decided to accept applications for the Economic Injury Disaster Loan Program.
This emergency loan provides small businesses up to $2 million. However, as soon as the SBA started accepting the applications, it got oversubscribed. According to SBA statistics, around four million small business owners subscribed for the loan, and the total amount summed up to $383 billion. The amount is much more than what the federal government had assigned. Congress gave only $17 billion for emergency loans; it is why SBA is trying to come up with a new strategy to distribute the loan amounts.
Terms to get the SBA emergency loan?
SBA provides these loans to the borrower directly. It carries a 3.75% interest rate and takes around thirty years to mature. Moreover, up to $10,000 is forgivable on these loans. Apart from that, SBA gives a $10,000 advance to those applicants as well who may later be rejected for the loan. However, the amount of advance is subject to change based on the number of employees working in the business when it applied for the loan. A business is given $10,000 for each working employee.
As the amount from Congress is lesser than the number of claims, SBA has decided to reimburse no more than $15,000 to each company.
Well, if this loan is not enough for you, you can also apply for the Paycheck Protection Program as well.
If you were unaware of this deal, then read on further to ease finances for your business.
What is the Paycheck Protection Program?
You can find this loan at any federally insured bank or credit card union. Moreover, you can borrow it from SBA guaranteed approved lenders as well. This loan is for organizations that have less than five hundred employees. If your business also has fewer than 500 employees, you automatically become eligible for it. This loan is also available to self-employed people, non-profit organizations, independent contractors, sole proprietors, tribal organizations, and veterans.
The good part about this loan is that you can get the money on the same day of your application if you get the approval. Moreover, by submitting a request to forgive your loan to your lender along with other important documents, you can get the loan forgiven as well. However, it solely depends on the lender and if the lender approves your request, one must do it within sixty days.
Apart from that, you also don’t need any collateral or personal guarantees, nor you will have to give credit card information to apply for the loan. Furthermore, these loans carry an interest rate of only 1% and take two years to mature. You can also defer your first payment for up to six months if you don’t have the means to pay immediately.
Apply for Emergency Injury Disaster loan and Paycheck Protection Program simultaneously
Indeed, the amount for the loan you are getting may not be enough to cater to your needs. What if you can apply for two small business loans at the same time and get more reimbursement? It sounds cool, right? Well, you can apply for EIDL and PPL simultaneously and can get selected for both the loan reimbursement.
However, you cannot use both loans for the same purpose. For example, if you are using your Paycheck Protection Loan for employee salaries, then use your EIDL to manage other expenses.
All in all, with the kind of protection the American government is providing to small businesses, the small business owners can now sleep peacefully.