Small businesses are suffering from the COVID-19 Emergency Declaration issued by both the President of the United States and the Governor of California. Many businesses are finding it difficult to meet their expenses and stay afloat during the closures and inabilities to operate as usual. The United States Small Business Administration (SBA) provides a number of programs for small business funding during emergencies such as the one currently at issue.
Disaster Loan Program
Small businesses in California impacted by COVID-19 are eligible to apply for the Economic Injury Disaster Loan Program. Under this program, the SBA is offering low-interest loans to small businesses and non-profits that have been impacted by the COVID-19. The loan can reach up to $2 million of working capital to support vital economic business expenses to help overcome the temporary loss of revenue.
The Disaster Assistance is designed to help small businesses with loans to cover business operating expenses after a declared disaster. If either insurance or funding from the Federal Emergency Management Agency (FEMA) is not enough to fully cover the financial loss business is experiencing during the COVID-19 emergency declaration, small businesses can use disaster loans for any economic loss including, rent, machinery and equipment, and inventory.
The Express Bridge Loans Pilot Program acts as an in-between option for small businesses that have an urgent need for funds while awaiting the approval and disbursement of an Economic Injury Disaster Loan. A small business that has a standing relationship with a Small Business Lender may have access to up to $25,000 of funds with an Express Bridge Loan.
The program is specific to disaster-related purposes for small businesses located in communities affected by Presidentially-declared disasters. The fast turnaround of this loan program provides vital economic support to small businesses to help overcome the temporary loss of revenue experienced during COVID-19.
For small businesses who cannot get traditional forms of credit, an SBA-guaranteed loan can help small businesses that are financially strained to make necessary business expenses such as payroll and inventory. The SBA guarantees loans made by lending institutions to small businesses that would not otherwise be able to obtain the financing. The SBA works as a liaison to reduce the risk of loss to lenders in the event of a default and makes it easier for small businesses to access capital.
The requirements for these loan programs are typically to meet size standards, the ability to repay and to have a sound business purpose. Even those with bad credit may qualify for startup funding. Small businesses applying for these programs must have exhausted all financial options and discover they cannot get funds from any other financial lender. The guaranteed is conditional on the lender following the SBA program requirements.