Small Business Loan Resources & Guides For Businesses Affected By The Coronavirus
The global coronavirus pandemic and the resulting loss of consumer demand is placing unprecedented stress on small businesses that have had to either scale back or shut down completely. Other businesses in select industries may be experiencing the opposite: They have so much demand that they are struggling to meet it under emergency conditions. There’s no way to sugarcoat it: Rough times are ahead, but don’t assume that means your business is doomed.
At the time of writing, the federal government is still shaping its response to the unfolding coronavirus pandemic and the accompanying economic fallout, so a lot of questions remain concerning what kind of relief will eventually be available. In the meantime, there are some resources you can immediately tap that can either directly extend credit to you or help guide you to it.
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5 Small Business Organizations That Can Help You Get A Loan
The Small Business Administration (SBA)
In the best of times, the SBA serves as a loan guarantor, making it easier for small businesses to get approved for high-quality loans originated by other lenders. It will continue to do so during the COVID-19 crisis, but during times of disaster, the SBA offers some additional help.
Economic Injury Disaster Loans
The most notable program comes in the form of Economic Injury Disaster Loans. Unlike typical SBA loans, these loans are federally issued, offering low-interest cash infusions to businesses within designated disaster zones. With regard to COVID-19 in particular, this includes states whose governors have requested aid under the Coronavirus Preparedness and Response Supplemental Appropriations Act. All 50 states, the District of Columbia, and US territories are now eligible.
Economic Injury Disaster Loans provide up to $2 million in funds to affected businesses. They can be used to pay debts, accounts payable, and other bills that can’t be paid due to disaster conditions. The loans carry a 3.75% interest rate for small businesses and a 2.75% interest rate for nonprofits.
You can also apply for a loan advance of up to $10,000 if you need a smaller amount of money urgently. If you have access to an SBA Express Lender, you can also apply for an SBA Express Disaster Bridge Loan, which has a faster turnaround time and can deliver up to $25,000.
Note: if you’re calling the SBA’s 1-800-659-2955 number to check on your EIDL, make sure to ask for the Tier 2 option, as this pertains specifically to the COVID-19 program.
Paycheck Protection Program
The SBA has begun implementing the Paycheck Protection Program (PPP), which is designed to help small businesses keep their workers on the payroll. The program will be available through June 30, 2020, and will begin processing applications on April 3, 2020.
The PPP is available to businesses with fewer than 500 employees (some exemptions apply), including independent contractors, the self-employed, and sole proprietorships. Nonprofit organizations and 501(c)(19) veterans organizations are eligible as well. Qualifying businesses, of course, need to show that they’ve been affected negatively by COVID-19. You can apply through any lender that offers SBA 7(a) loans.
While technically a loan, the SBA will forgive the entirety of the principal, provided all employees are retained for eight weeks, and the money is used for payroll and overhead. Forgiveness is also dependent on maintaining current salaries and will be reduced if headcounts decline or wages and salaries decrease.
The loan has a term length of two years and a 0.5% interest rate.
Note that the SBA isn’t directly making these loans. You’ll have to go through a third-party lender. Unfortunately, these lenders may impose additional hurdles to the process, so be prepared to navigate through a substantial amount of red tape.
You can locate a PPP lender through the SBA’s search tool.
SBA Debt Relief
Businesses with existing SBA 7(a) loans will be getting a break under the SBA Debt Relief program, meaning that:
- The SBA will pay the principal and interest of current 7(a) loans for six months.
- The SBA will pay the principal and interest of new 7(a) loans issued before September 27, 2020.
Community Development Financial Institutions (CDFIs)
Many CDFIs, such as credit unions, offer low-interest loans and other types of financial assistance during natural disasters. These programs tend to be dependent on federal funding, so keep an eye on stimulus relief bills being proposed at the federal level. If you aren’t sure if there is one in your area, you can download a list of certified CDFIs through the US Department of Treasury site.
Once you’ve found your local CDFI(s), check their websites to see what kinds of programs they offer. In addition to the aforementioned loans, many will offer advice and consultation to businesses undergoing disaster conditions.
SCORE is the largest network of business advisors in the US. During normal times, they offer mentoring, webinars, courses on demand, and a library of online resources. The good news is that most of these things can still happen during quarantine, and, except for in-person events, they still are.
While they can’t directly get money into your hands, they can advise you on the best course to get money as quickly as possible. If you’re feeling lost about what to do and you’re stuck at home, SCORE is a great resource you can tap without stepping foot outside. They’re currently producing a lot of coronavirus-related content on their website and updating frequently, so park your browser there for new developments as the crisis unfolds.
Internal Revenue Service
So, okay, you’re probably not going to get a loan from the IRS, but you may have suddenly found yourself with a lot less money to meet your tax obligations. Luckily, it looks like the IRS will be cutting you a break:
Following President Donald J. Trump’s emergency declaration pursuant to the Stafford Act, the U.S. Treasury Department and Internal Revenue Service (IRS) today issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest. The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest. This guidance does not change the April 15 filing deadline.
Additionally, the CARES Act reduces the tax burden on businesses affected by COVID-19. This includes:
- A 50% tax credit on up to $10,000 in wages per employee for businesses that had to suspend or partially suspend due to a shutdown order if gross receipts declined by more than 50% from the same quarter of the previous year.
- Social Security tax for 2020 may be deferred and paid over the next two years.
- Businesses that would receive the alternative minimum tax credit at the end of 2021 can receive them early.
- Business interest expense deductions will be expanded for 2019 and 2020 taxes to 50% of taxable income (from 30%).
- Excise taxes on alcohol will be waived, provided it is used to produce hand sanitizer in 2020.
Paid Sick Leave
Self-employed individuals can qualify for a tax credit that’s intended to function something like paid sick leave. The credit is available through the end of 2020 and can be claimed for up to 10 days. To be eligible, you have to be in an area subject to a quarantine or isolation order related to COVID-19, been advised to self-quarantine by a healthcare professional for reasons pertaining to COVID-19, or are experiencing COVID-19 symptoms and are seeking a medical diagnosis. You must also not be able to work remotely.
Eligible employers may also qualify for a sick leave credit for employees. The tax credit is for the employee’s regular rate of pay or $511 per day, whichever is lower. The credit may be claimed for up to 10 days per employee.
I’d recommend checking in with the IRS site’s coronavirus page from time to time to keep up with developments. It also provides links to other resources that may be of use to you.
State-Level Grants, Relief Programs & Guides
As states around the country deal with the business fallout from the virus, many have begun to offer some form of relief to businesses that are taking a hit. Keep in mind that assistance may also be provided at the municipal level, particularly if you’re in a hard-hit city. For rural areas, check with regional development agencies to see if they’re providing assistance.
Departments Of Labor/Unemployment Insurance
Unemployment insurance has been expanded to cover some groups that aren’t usually included. Of particular interest to our readership may be the fact that it now covers the self-employed…at least in theory. The exact process for applying for UI varies by state, even with the federal expansion, as will the amount you will be given. The minimum benefit is one-half of your state’s average unemployment payment.
Alabama has consolidated its COVID-19 related online resources to a site called altogetheralabama.org. While there aren’t that many state-level programs, be sure to check out the local business resources, as cities such as Birmingham and Auburn, as well as regional initiatives, are offering assistance in some form.
Alaska has formed the Alaska Economic Stabilization Team (AEST) to actively address the economic fallout from COVID-19. The governor’s six-point plan includes 100% state-guaranteed loans to Alaskan businesses and a proposed $2 million employment training program.
You can stay up-to-date on Arizona’s COVID-19 business resources through its Arizona Together site. The state has approved a $50 million Coronavirus Relief Package that allows the governor to allocate funding to various support programs around the state. You can find a list of actions the governor has taken on the governor’s website.
Arkansas’s Quick Action Loan Program will lend qualifying companies up to $250K, with priority to businesses that are in the supply chain of essential goods and services. The state is also making up to $12 million available in Community Development Block Grants.
You can stay up-to-date on California’s COVID-19 business resources through its response site. California is currently deferring sales and use taxes for up to $50,000 for small businesses with less than $5 million in taxable sales. It’s also offering a 90-day extension for businesses filing a return for less than $1 million in taxes.
Finally, the state is offering the California Small Business Loan Guarantee Program to businesses that don’t qualify for federal funding. Qualifying businesses will have fewer than 750 employees. California will guarantee up to 95% of the loan for a term of up to seven years. The loan is being offered through IBank.
Connecticut offers the $50 million Connecticut Recovery Bridge Loan Program for businesses and nonprofits with fewer than 100 employees. These are zero-interest loans of up to $75,000 or three months of operating expenses, whichever is lower. The loans will be administered on a first-come, first-serve basis. The initial round of funding is currently closed, but you can keep up-to-date on it and other programs through the state’s coronavirus response site.
If you’re overwhelmed, you may want to take advantage of the COVID-19 Business Emergency Response Unit, which can answer questions about how to navigate the state’s business resources. You can call them at 860-500-2333.
Delaware has launched an emergency loan program for small businesses that fall under the hospitality umbrella. These are no-interest loans of up to $10,000 with a 10-year term. Qualifying businesses will have less than $1.5 million in annual revenue and have been operating with revenue for at least a year. You can follow further developments through Delaware’s business resources page.
Florida’s Small Business Emergency Bridge Loan will be available to businesses affected by COVID-19. These loans are interest-free, but they are not designed to be a primary source of assistance.
You’ll also find information about the Rebuild Florida Loan Fund, which can provide up to $500K from the state’s Business Loan Fund for businesses that were affected by the crisis to help them rebuild or expand. Eligible businesses will be in industries targeted by the state as essential for strategic growth. These loans can be used for:
- Inventory purchases
- Construction or renovation
- Working capital needs
- Capital start-up loans
- Machinery and equipment purchases
- Equipment financing
You can stay up-to-date on Georgia’s response to COVID-19 on its government page.
You can stay up-to-date on Hawaii’s response to the pandemic on its COVID-19 page.
You can find resources for businesses on Idaho’s novel coronavirus information page.
Illinois is making more than $90 million in emergency assistance available for small businesses, which includes grants and loans. Programs include:
- Illinois Small Business Emergency Loan Fund: Provides loans of up to $50K for small businesses with no payments for six months, after which it will become a five-year loan at 3% interest.
- Downstate Small Business Stabilization Program: Offers grants of up to $25K to small businesses served by DCEO’s Office of Community Development.
- Hospitality Emergency Grant: A $14 million grant program that provides up to $25K to eligible bars and up to $50K for eligible hotels.
You can keep up-to-date on new developments on Illinois’ coronavirus response page.
You can stay up-to-date on developments within Indiana on its coronavirus response page.
You can stay up-to-date on developments within Iowa in its novel coronavirus section.
You can stay current on Kansas’s response to the pandemic through the Kansas Department of Commerce site.
You can stay up-to-date on Kentucky’s initiatives on its Team Kentucky COVID-19 page.
You can stay current on Lousiana’s response to the pandemic through its government page.
The Finance Authority of Maine (FAME) is providing some relief for businesses with the state. This includes FAME Direct Loans and approval of OLA loans at 50% of the regular insurance rate. You can find more information on that and other responses by Maine’s government through its COVID-19 response page.
Maryland is providing financial assistance for businesses affected by COVID-19 through the following programs:
- Maryland Small Business COVID-19 Emergency Relief Loan Fund: A $75 million loan fund with no payments for the first 12 months before converting into a 36-month term loan at 2% interest.
- Maryland Small Business COVID-19 Emergency Relief Grant Fund: A $50 million grant program that offers up to $10,000 to businesses.
- Maryland COVID-19 Emergency Relief Manufacturing Fund: A $5 million fund to help Maryland manufacturers produce personal protective equipment.
Unfortunately, as of April 6th, applications for these programs are closed. It’s unclear whether there will be additional rounds of funding. You can read more about these programs and other virus-related business issues on the state’s coronavirus information for businesses page.
Michigan is offering financial assistance to small businesses through the following programs:
- Michigan Small Business Relief Program: A grant program administered by a group of nonprofit economic development organizations. You’ll apply through whichever organization serves your local area.
- PMBC COVID-19 Emergency Access & Retooling Grants: These are grants of up to $150K available to businesses looking to rapidly convert to manufacturing personal protective equipment.
Minnesota is offering assistance through the following initiatives:
- Small Business Emergency Loans: Offers loans of up to $35K, interest-free based on economic injury. These will have five-year terms, with payments deferred for six months.
- Minnesota Small Business Loan Guarantee Program: The state will guarantee loans from partnered lenders for a variety of uses. The program will provide an 80% guarantee up to a maximum of $200,000. A fee of 0.25% on the guarantee loan principal will be charged for each loan enrolled in the program.
Applications are closed as of 4/14/20. It’s unclear whether there will be additional rounds of the program.
You can stay current on Missouri’s response to the pandemic through its government page.
You can stay up-to-date on Montana’s response to the pandemic through its COVID-19 page.
You can stay current on Nebraska’s response to the pandemic through its government page.
You can stay current on Nevada’s response to the pandemic through its health response page.
New Hampshire is currently offering some tax relief for businesses. You can read more about that and other coronavirus updates on New Hampshire’s COVID-19 business resources page. The New Hampshire Business Finance Authority (BFA) offers a couple of state-level options for businesses.
- The Capital Access Programs (CAP) provides banks with incentives to make loans and lines of credit to small businesses in amounts up to $200K. Qualifying businesses must have annual revenues under $5 million.
- The BFA also offers direct loans for up to $200K. It has flexible amortization schedules but must be approved by the NH Executive Council.
New Jersey provides a FAQ for businesses looking for information regarding coronavirus initiatives. They also have a handy eligibility wizard, which can save you some time. Programs that can help businesses affected by COVID-19 include:
- New Jersey Economic Development Authority (NJEDA) Small Business Emergency Assistance Loan Program: This is a direct loan of up to $100K to New Jersey businesses that have been in business for at least a year and have less than $5 million in annual revenue. Eligible businesses must have had at least a 20% decline in revenue. These loans have 10-year terms, 0% interest for the first five years, and a maximum of 3% interest for the last five. Repayments are deferred for the first year. As of 4/13, the program is “oversubscribed.” You can still apply, but it sounds like your application may get rolled over to future rounds of funding.
- NJ Entrepreneurship Guarantee Program: This program provides a guarantee of an investor loan for up to 80% of the total investment amount, not to exceed $200K.
- Emergency Assistance Grant Program: This program provides up to $5K for payroll and working capital expenses.
You can stay up-to-date on New Mexico’s coronavirus initiatives on the state’s economic development department site. New Mexico has greenlit the New Mexico Recovery Fund, which is available to businesses with more than 40 employees that can demonstrate they experienced losses due to COVID-19. These loans are based on 2019 operating expenses and cannot exceed $10 million. APRs will range from 3%-5%, and the term lengths will be between two and four years.
New York City has some programs specifically for businesses operating within the five boroughs. These include:
- NYC Employee Retention Grant Program: Businesses that have seen a decrease of at least 25% in revenue and have been in operation for at least six months with no tax liens or legal judgments can qualify for a grant to cover 40% of payroll expenses (capped at $27,000) for two months.
- NYC Small Business Continuity Loan Fund: Interest-free loans of up to $75K are available to businesses with fewer than 100 employees that have had a decrease of at least 25% in revenue.
Small businesses in the city and the rest of the state should keep an eye on the coronavirus FAQ for businesses for new developments.
You can stay up-to-date on North Carolina’s coronavirus initiatives on the state’s COVID-19 informational page for businesses.
- Primary Sector Businesses: Loans of up to $1 million that can be used for working capital, equipment, or real estate.
- Childcare Loan Program: Up to $100K at 2.5% interest for certified daycares.
- Rural Growth Incentive Program Emergency Loans: Loans for “essential service companies” in communities with less than 2,500 people.
Ohio has launched a frequently updated coronavirus informational site.
Oklahoma has a COVID-19 resources page for businesses that’s worth keeping an eye on.
Business Oregon, a state agency, presents resources for COVID-19 affected businesses. The state-specific programs appear to be focused on nonprofits at the moment, in the form of the Oregon Community Recovery Grant Program and the Oregon Small Business Stabilization Fund. Note that the latter does not directly lend to small businesses but provides funds to nonprofit organizations that do. The state is also delaying income tax and payment deadlines.
Pennsylvania recently exhausted its COVID-19 Working Capital Access Program; it’s unclear whether there will be additional rounds in the future. The Pennsylvania Department of Community and Economic Development has links to business-related coronavirus resources.
Rhode Island is providing 45 minutes of free tech support via teleconference to businesses. The state also plans to provide relief to small businesses through its judicial Business Recovery Plan, which will provide supervised protections. You can stay up-to-date on Rhode Island’s business-related responses on the Rhode Island Commerce site.
You can stay current on South Carolina’s response to the pandemic through its COVID-19 page.
Launch Tennessee has collected a lot of useful links (expand the Business Continuity section) for small businesses concerning how to navigate the crisis.
Texas is providing tax relief for impacted businesses through the Comptroller’s Office, suspending the 60-day deadline for businesses to contest audit results. You’ll want to contact the office to make individual arrangements, however. You can keep up-to-date on new developments on the Texas Economic Development coronavirus page.
Salt Lake City is offering 0% interest loans of up to $20,000 to affected businesses through its Salt Lake City Emergency Loan Program. These loans have five-year terms, with repayment deferred for 90-days after the mayor drops the current “Proclamation Declaring a Local Emergency.”
Round 2 of the Utah Leads Together Small Business Bridge Loan program is accepting applications until 4/16. This round is for nonprofits, but for-profit companies that applied in the first round and were not successful will automatically be considered for round 2 funding. Utah Leads Together Small Business Bridge Loan amounts range from $5,000 to $20,000 with 0% interest for up to 60 months. Loan payments are deferred for 12 months.
You can explore other resources on Utah’s coronavirus site.
Vermont is providing relief to businesses that owe Meals and Rooms Tax or Sales and Use Tax until further notice by waiving penalties and interest for late submissions. The state is also offering support to businesses that require technical assistance. Additional information is available on the state’s response page.
Virginia is offering rapid response funding through the Workforce Innovation and Opportunity Act for businesses that remain open. These funds can be used to clean facilities or support emergency needs. Impacted businesses can also request deferments on sales tax for 30 days.
You can find a list of business-related coronavirus links on Washington’s coronavirus page. Businesses affected by the coronavirus can apply for a Working Washington Small Business Emergency Grant of up to $10,000, just be aware that a number of counties in the state have suspended applications at this time due to the overwhelming volume.
Wisconsin is offering support to small businesses through the Small Business 20/20 program. These are grants of up to $20K to existing CDFI clients to help with cash-flow problems. You can find info about that and coronavirus updates on the Wisconsin Economic Development Corporation site.
You can stay up-to-date on Wyoming’s business-related responses to the pandemic on their COVID-19 site. You can also find some resources on the Wyoming Small Business Development Center Network site.
What To Do If You Need Fast Funding
On the other hand, if you’re a business that is experiencing higher-than-normal demand during the COVID-19 crisis, you may be dealing with a different kind of problem. Perhaps you need to get ahead of your inventory or purchase equipment to deal with the increased stress on your business. In that case, you can probably take a more mundane route to get funding.
While there will no doubt be instability in the lending market for the foreseeable future, lenders are often some of the first institutions to receive federal relief in times like these. Appetite for risk will vary by the lender, but some will likely be looking for borrowers who seem like a safe investment. Note, I’d strongly caution businesses that have had to cut back or temporarily shut down operations against seeking high-interest financial products at this time; the expense can quickly balloon out of control if you’re not able to keep up with payments. Debt collectors are the last thing you want to add to your plate right now.
If you need a loan quickly, I’d recommend taking a look at our top-ranked small business lenders for 2020. Bear in mind that some may or may not be lending as usual at this time.
A simpler option for short-term financing, particularly right now, might be a business credit card. While the interest rates on credit cards can be extremely punishing, if you pay off your balance each month, you’re effectively getting a “free” extremely short-term loan. This can be useful for smoothing out your cash flow and making direct purchases. Many also come with lucrative rewards programs that can allow you, if you play your cards right, to actually save money by using a business credit card. Check out our guide to getting a quality business credit card fast for more info. And read about How To Use (& How To Avoid Using) Business Credit During The Coronavirus Pandemic.
If you’re falling behind on credit card payments right now due to diminished business from the pandemic, our guide about how you can get help from credit card issuers might be useful.
Learn About Small Business Loans From Our Resources
Finally, we have a lot of content on this site that deals with how to find and apply for loans under various circumstances. Much of it will still be relevant during the COVID-19 crisis (and you can expect us to continue updating and adding to it as circumstances change and various federal relief packages start to come online).
If you’ve never had to apply for a business loan before, we can walk you through the process of where to look and how to apply. Given the volatility of the moment, you probably also want to take stock of whether or not you can afford a small business loan. We can also help you figure out how strong your business loan application is.
And be sure to check back in with us in the following weeks as we try to bring you the best, most current information about how your small business can weather the storm.
Merchant Maverick is currently offering a hub of resources and information for small business owners during the coronavirus pandemic. Learn about taking your business online or accepting payments online going forward, figure out how your restaurant can survive the pandemic, and read some tips from our remote team about working from home with kids.