Many of us experienced shock, and still might, as Governors execute stay-at-home and mandatory store closures orders. Fortunately we have a growing count of resources and relief programs to take advantage of.
I took some time to reach out to Colin Hutchinson, of Lendio of Southwest Michigan, to learn more about existing resources and expanding ones in the historic $2 trillion dollar coronavirus stimulus package.
If you’re not familiar with Lendio, it is a platform that connects businesses with over 75+ lenders, making finding funding easier and faster.
Here’s a quick summary of what I’ve learned:
- $350 billion has been budgeted to help small businesses with 4% interest loans in 2020 (previously only $30 billion was allocated for 2020)
- Loans are made available through over 800 SBA certified banks, credit unions, and other lenders
- Loans are 100% guaranteed by the SBA (traditional SBA loans were 75% guaranteed)
- Businesses must have fewer than 500 employees
- Businesses may have the loan forgiven if they meet certain criteria like not laying off any employees through June 2020
- Maximum loan size is $10 million
- No personal guarantee or collateral is required for the loan
- Process of getting loan can take several weeks
- Getting approved for an SBA loan is NOT guaranteed and borrowers should consider all options for funding their business operations during this downturn
What does this mean?
The goal of these loans is to help ease the pains associated with the reduction in spending due to stay-at-home and mandatory store closure orders. Think paying for your building lease, rent, or mortgage, as well as payroll.
If you’re looking to apply for these loans, it should be to keep your current employees, and at their current pay scale. Doing so could lead to full loan forgiveness, according to Forbes.
With SBA loans going from 75% guaranteed to 100% guaranteed, it should mean that lenders will be more willing to lend, as the full amount of the loan is guaranteed by the government.
How do I apply?
Contact any organization that can provide SBA loans. This includes platforms like Lendio and local banks and credit unions. Even in this time of uncertainty being approved is not guaranteed.
How long will I have to wait?
The truth is that applying for a loan today hasn’t really changed the information & paperwork needed or the time it takes to get a decision. With that said, you can get faster decisions if you work with an SBA preferred lender. SBA preferred lenders are those banks and credit unions that have demonstrated a high level of commitment to supporting small local businesses over time. As a result, they are allowed to make final credit decisions which speeds up the process. Some local banks may have this designation. Lendio works with a number of preferred lenders.
What if I don’t get approved?
Another important aspect of the CARES Act for small businesses is that it expands eligibility for the SBA’s Economic Injury Disaster Loans (EIDLs). There is $8.3 billion budgeted for EIDLs in 2020. In early March, the SBA’s disaster loan program was extended to all small businesses affected by COVID-19, but the CARES Act opens this program up further and makes it easier to apply.
- EIDLs can be approved by the SBA based solely on an applicant’s credit score.
- EIDLs that are smaller than $200,000 can be approved without a personal guarantee.
- Borrowers can receive a $10,000 emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments or repaying obligations that cannot be met due to revenue losses.
Disaster loans are available directly from SBA. Businesses can apply directly to the SBA here: https://www.sba.gov/page/disaster-loan-applications
Aside from the SBA grant program, there are a number of grants available from multiple organizations. I’m pulling that information together currently and I’ll shortly.
Second, there are a number of grants available from multiple organizations. I’ll have more on that tomorrow.
As new resources come to my attention I will be sure to share them. In the meantime, to get started with your SBA Loan you can visit Lendio of Southwest Michigan and apply.
*No payment or sponsorship was provided by Lendio.