Loan Programs for Small Businesses Impacted by COVID-19

April 3, 2020


Small businesses are the backbone of the American economy. There is no debate that the current COVID-19 pandemic will cause significant economic harm to this critical part of our nations GDP.  

How important is it for small businesses in the United States to be vibrant and successful? Consider these facts about the magnitude of the role small businesses contribute to the United States economy (data from the Office of Advocacy, Small Business Administration).

Our firm provides equitably priced and structured working capital solutions to B2B and B2G small businesses nationwide via the collateralization of their accounts receivables. Our parent company, Gulf Coast Bank & Trust Company, is an FDIC-insured bank based in New Orleans and serves consumer and business clients with services including loans, deposits and trusts. We are always looking for ways to help support our clients and educate them about other loan programs and tools available to help them prosper. During this pandemic, the need for small businesses to take advantage of these important initiatives may be the difference between economic survival and failure.

It is interesting to look at what SMEs are seeking in terms of financial assistance today. A quick search this morning using SBA Loan confirms how SMEs are searching Google at an unprecedented level to seek and find loan solutions for their businesses.

 

The chart is only for the past 30 days and it is important to note that the line on the chart uses interest over time in a specific keyword. This metric assesses search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means there was not enough data for this term. So needless to say, there is a lot of searching going on!

So where does a SME turn to get educated about all of the various options available to them to help them combat the economic wrath of COVID-19? I would highly recommend the place to start is the Small Business Administration website, www.sba.gov. This is the official United States government portal. It has easy-to-read information on:

  • Coronavirus Funding Options
  • Guidance for Businesses and Employees
  • Local Assistance
  • How to Join the SBA’s Relief Efforts
  • Other SBA Products and Resources
  • Government Contracting

For SMEs seeking loans under the current SBA loan programs, the website summarizes the CARES Act, which currently contains $376 billion in relief for American workers and businesses.

As of April 3, 2020, the CARES Act established new temporary programs to address the COVID-19 outbreak. As the outbreak progresses, more opportunities may become available.

I won’t go into the details of the four programs available as part of CARES; as the SBA website has a complete and accurate description of each. A summary list of the current programs is provide below:

  • PPP or Paycheck Protection Program. This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7 (a) loan program. Note: there is a deal of additional information on the 7(a) program also on their website.
  • EIDL Loan Advance. This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.
  • SBA Express Bridge Loans. This program enables a small business who currently has a business relationship with a SBA Express Lender to access up to $25,000 quickly.
  • SBA Debt Relief. The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.

For the programs listed above, the SBA website has very detailed information on very important topics like these, including:

  • Eligibility
  • Who can apply
  • Loan details and forgiveness
  • Other assistance
  • And lender forms and guidance

Another great resource is The Learning Center, which can be found on the SBA website, provides updates from the SBA. I have been on their email list for years and the quality and accuracy of the information is first class.

Finally, know that the SBA website is much, much more than just an excellent source of objective information about COVID-19 funding options for your business and employees. There is a great deal of straight forward advice and suggestions on how to deal with COVID-19, and it has a direct link to the CDC. The CDC has the most up to date information on COVID-19 and again is not a commercial website attempting to sell you a product or service of any kind.

One of the other very helpful and informative parts of the SBA website are the discussions about common issues that small businesses encounter (even before or after the COVID-19) and ways to successfully deal with them. The current list includes topic like:

  • Capital Access
  • Workforce Capacity
  • Inventory and Supply Chain Shortfalls
  • Facility Remediation and Clean Up Costs
  • Insurance Coverage Issues
  • Changing Market Demands
  • Marketing
  • Business Plans

Gulf Coast Bank & Trust Company also has information on programs for small businesses. These include but are not limited to COVID-19 Payroll Protection Loans, traditional loan products, its extended hours during this pandemic and other data. Learn more about these resources at www.gulfbank.com.