Running a business during the COVID-19 outbreak comes with unusual challenges. To assist small businesses during this time, the federal government has passed the CARES Act, which include the Payroll Protection Program (PPP) and the SBA Economic Injury Disaster Loan (EIDL).
Without a doubt, many owners must know that the PPP will only cover two months of expenses to cover payroll. Furthermore the EIDL can take two to four months to process. I need funds beyond just covering payroll expenses. Are there other financing options available to me? Yes. Keep reading to learn more about other private initiatives. Also, you may be eligible for a loan or grant from your local or state government. You also may be eligible for a Term Loan or Business Line of Credit from Lendinero. To learn more about our solutions write to us at: email@example.com
The United States Small Business Administration (SBA), is a government agency that provides financial assistance to small businesses during disasters. This information focuses on the SBA Economic Injury Disaster Loan program in particular. However, the SBA does offer a variety of loan types.
If you live in an area that experiences hurricanes, tornadoes or natural disasters, you’re likely familiar with the SBA Economic Injury Disaster Loan program. However, the program was recently broaden to include small businesses impacted by COVID-19.
The EIDL loans are available to businesses with less than 500 employees. Also, businesses in states that have declared for disaster. Most states have declared themselves as disaster areas because of Covid-19. Last, your business must have been operating before February 1, 2020.
Loans of up to $2 million are available to businesses, with repayment terms of up to 30 years. The amount your business is eligible for depends upon a variety of factors, including loss in revenue, payroll costs, and rent payments. More important, the financial documentation that you present to show previous revenues, expenses and losses.
Interest rates are 3.75% for for-profit entities. There is no fee to apply for loans under $25,000, and a $100 processing fee for loans above that. You start repaying your loan 12 months after you receive your funds.
First, there is no collateral requirement to secure loans below $25,000. Second, for loans above $25,000, no specific collateral is required. However, the business owner will provide a personal guarantee. Last, the SBA will file a lien with the Uniform Commercial Code, known as a UCC-1.
You may use the loan proceeds for payroll costs, salaries, sick leave, business rent, business mortgage payments, material costs, and existing debt.
Here is some of the information and paperwork you will need to have on hand to apply:
While the SBA has streamlined their existing loan application process to get funds there are still uncertainties. The SBA expects to have a decision on your application within hours. However, the process may take from 1 month to 4 months. Without a doubt, the SBA was not ready to handle the amount of applications it is receiving.
As part of this program, the SBA is now also offering emergency advances on the EIDL loans only. Once a small business completes an application for the EIDL loan, they can request an advance on the funds up to $10,000. According to the SBA, funds will be made available within three days of a successful application. However, this may take longer. Realistically, it may take up to 30 days or more. Also, you can use the funds to pay sick leave for employees who are unable to work due to a direct effect of COVID-19, payroll, materials, rent or mortgage payments, or repaying outstanding obligations.
More important, you must apply before December 31, 2020
It should be noted, that applying for the EIDL Loan and or advancement is just like applying for any business loan you have previously applied for. Even though the government has taken steps to assist businesses, extensive paperwork and financial documentation is required. With this in mind, specialists can help you step by step to review forms, conduct financial analysis and prepare the package. Thereafter, all information is submitted to the SBA. Last, please download each document in the following order with your loan specialist/agent.
Just click each link and donwload it.
The SBA PPP loans provide small businesses with payroll assistance because of Covid-19.
These loans are designed to get funds to small businesses as fast as possible. Because of this, the application process for an SBA PPP loan is less complex than the EIDL loans.
SBA-approved lenders will distribute the funds to small businesses. However, some banks are not approved and others have stopped taking applications. With this in mind, you need to be checking consistently for changes and updates.
Without a doubt, the goal of the PPP is to assure businesses keep employees on their payrolls during this disaster. Because of this, borrowers are eligible to have a portion of their loans forgiven when they demonstrate that they retained their employees. Moreover, if they restore employees too.
Businesses that have been impacted by COVID-19 and meet the following requirements are eligible to apply:
Loans of up to $10 million are available to businesses. The amount your business is eligible for is based upon 8 weeks of average payroll, plus an additional 25% of that amount. SBA PPP loans have a term length of 2 years to repay back.
Interest rates are 1%. Because the goal is to get the funds as fast possible, there is no fee to apply. Also, loan payments will be deferred for at least 6 months.
There is no collateral or personal guarantee requirement to secure these loans.
A key part of SBA PPP loans is they are eligible for loan forgiveness. Businesses that meet certain criteria are eligible to have a portion of their loans forgiven if the funds were used for payroll costs, interest on mortgages, rent payments, and utility payments made in the eight weeks following the loan origination. However, current guidance is that 75% of the funds must have been used to cover payroll expenses.
The amount borrowers are eligible to have forgiven will be reduced if:
For a more detailed overview of how the SBA PPP loans will work, check out this excellent guide from the U.S. Chamber of Commerce.
SBA-approved lenders and some other financing providers are now accepting applications for SBA PPP loans.
Today, you have another choice in these hard times. Acceptable property types include: residential, investment or commercial properties to secure the business line of credit. Another relief financing solution by Lendinero.
Without a doubt, you will save on legal representation and legal costs. All in all, an attorney on your side is helpful during these times.
To sum up, please visit the following link and become familiar with fees allowed by the SBA. Furthermore, Lendinero is acting as an agent or broker in compliance with the fees allowed by the SBA. Please visit:
The compensation an agent charges you must bear a necessary and reasonable to the services actually performed. In addition, they must not include any expenses which are deemed by SBA to be unreasonable.
Thereafter, it states: Compensation must not include charges prohibited in 13 CFR 103 or SOP 50-30, Appendix 14. What happens when the SBA deems that the amount of compensation is unreasonable? These actions may be taken:
Violation by an Agent of any of these rules may result in SBA’s suspension or revocation of the Agent’s privilege of conducting business with SBA.
The following are not considered agents according to the SBA. First, an applicant’s accountant for the preparation of financial statements or tax returns required by the Applicant in the normal course of business. Furthermore, that said accounting services are not related to the loan application. Second, any professional retained by you in the normal course of business are not considered agents. Moreover, that those serves are not related to the application or loan closing. Direct costs associated with document preparation in connection with the loan closing do not need to be reported in the SBA Fee Disclosure Agreement. Besides, an agent who charges more than the fees below needs to submit an itemization of services and justification of work performed to the SBA.
In summary, you are not obligated to utilize our services. Loan specialists and agents will assist you with loan packaging, prepare financial documents, document reviews, analysis, consultation and any services allowed by the SBA. Last but not least, PPP and EIDL approvals are subject to credit reviews, underwriting and due diligence.