Many businesses do and will need economic help as we work through these unprecedented times of COVID-19 and social distancing. To help small businesses (and midsize for that matter) find resources that may help your business, here is a current list of options and programs you may be able to take advantage of right now:
- SBA Disaster Loans – up to $2M at 3.75%, 30-year term. This requires your state's governor to request disaster designation from the federal government. This is happening daily and will be broadly available. If your state has, you can apply here: https://disasterloan.sba.gov/ela/ (FYI, SBA loans may be available to firms with 1 to under 1,500 employees).
- Standard SBA 7a Loans - up to $5M. This expected to increase with the stimulus package that we expect to pass Congress shortly. Most big banks do SBA loans, or you may want to use LenderMatch.
- Some banks are offering forbearance and aid programs. This is evolving quickly. There's a list here that Forbes is updating regularly. In addition, if you use American Express Business – they have a program that allows their customers to delay up to 2 months of payments, interest-free. Just call American Express’ customer service and ask.
Other Ideas Your Business May Consider to Improve Your Cash Position
There are other methods you may be able to improve you cash position including:
- Existing vendors are an amazing source of credit. They know you and your business already. Many may allow you to delay payment if you ask. Perhaps request changing that Net 30 to Net 90 terms. Include your landlord in this discussion as this is often a significant monthly payment. Maintaining strong Cash flow is super important.
- If you have clients that are faring well, ask if they will pay bills early. Perhaps offer a 1-2% discount if they speed payment.
- If you have a 401(k) plan, you can suspend your match and reinstate it when your business is back up and running at full steam again.
Also remember that tax deadlines have been extended to July 15th for most in case you owe.
What is Expected in the Government Business Stimulus Package for Small Businesses
While this is not final as of the writing of this post, here is what is currently expected to be in this legislation:
- $350 to $367 billion in aid for small businesses — This would come in the form of loans with the goal to keep Americans on payrolls as economic activity has come to a standstill for many. Under the proposed program, loan money that small businesses use to cover payroll, rent, mortgage obligations, and utilities will be forgiven. The legislation is also expected to provide billions in debt relief on existing loans.
- Paid sick leave and family leave – Small businesses will be required to provide leave and will be reimbursed by the government. This will likely mean that 2 weeks paid sick leave is offered at full salary up to $511 per day, and up to 12 weeks paid family leave at 2/3rds salary—up to $200 per day for both full-time and part-time workers.
- $600 per week in self-employment unemployment insurance — For the first time, self-employed individuals will qualify and there will be $600 additional self-employment insurance for those who already qualify.
This stimulus can make a difference for many businesses to survive. Also know that these programs can take time to setup and payout. Do think through how to manage the amount of time it may take to receive payment if you decide to take advantage of any of these programs or are impacted by the paid leave provision. Wishing you well.
This is not tax or legal advice. Please consult your specialist for what is right for your business situation.