SBA Small Business Loans: No matter you are seeking financial assistance for your small business in response to the recent COVID-19 outbreak or normally figuring out ways to get financing to grow, a loan from the Small Business Administration (SBA) is the appropriate solution any small business owner requires.
Also Read: Government Loans: Here’s Everything You Must Know
An SBA low-interest long-term loan is a viable option, especially for people who are facing substantial disaster-related physical or economic damage or those who wish to expand their business and cannot acquire other non-government financings.
Take a look at some of the best small business loans:
SBA Paycheck Protection Program (PPP)
It is one of the new and modified programs built by the passage of the CARES Act on March 27, 2020. The Paycheck Protection Program (PPP) offers forgivable SBA emergency 7(a) loans of up to $10 million to small businesses.
Any small business can avail this plan including business with 500 or fewer employees such as sole proprietorships, independent contractors, and self-employed people impacted by the global pandemic.
Following the passage of the PPP Flexibility Act of 2020, a small business loan will now be partially or fully forgiven. A minimum of 60 percent of the amount forgiven is utilized for payroll and 40 percent of the amount forgiven is used for mortgage interest, rent, and utilities.
Rather than a 6-month payment deferral, loans will be now deferred till the SBA remits the forgiven amount to a lender. If you do not consider forgiveness, then your payments will be deferred for 10 months from the end of the covered period.
As earlier, no collateral is needed and the loan will not have any type of fees. But rather than a 2-year term, users will now have 5 years to pay off their loan at the same 1 percent fixed rate as before.
But what happens to the loan if laid-off employees acquiring that additional $600/week on unemployment insurance deny returning to work when they are provided their jobs back under the PPP? The PPP Flexibility Act of 2020 confirms earlier guidance that if a person makes a good-faith offer to rehire the employee and document it, then he or she can eliminate that employee from his/her count for purposes of forgiveness. Furthermore, the Flexibility Act includes 2 more exclusion exceptions, which are as follows:
- if a person is not able to retain or rehire an employee due to coronavirus restrictions; and/or
- if he or she cannot find and hire a fit replacement for a furloughed employee due to lack of qualifications.
Also Read: Best Personal Loans For Bad Credit
Where To Apply For The SBA PPP?
You can apply for this loan via any of 800 existing SBA 7(a) lenders or any participating federally insured depository institution, federally insured credit union, and Farm Credit System institution. Begin by consulting with your local lender to know if it is participating.
Do not use any other medium to apply for a PPP loan. Because scammers are already going after small business owners, reports the Federal Trade Commission, which filed a case against one such company recently.
All you need to do is go to the SBA website for applying. Also, the SBA will never ask for Social Security numbers, or bank account or credit card numbers. In short, you need to be cautious while applying.
Economic Injury Disaster Advance Loan
Small business owners in all 50 states, Washington D.C., and U.S. territories are considered qualified for applying for an Economic Injury Disaster Loan (EIDL).
In this program, you will have to pay an advance of up to $10,000 during the application process. This advance is made available within days of a successful EIDL and does not have to be repaid.
Also Read: Facts About Loan Underwriting
SBA Economic Injury Disaster Loan (EIDL) Assistance
EIDL is particularly designed to help small businesses to recover from the economic effects of coronavirus. Disaster assistance loans of up to $2 million with maximum terms of 30 years are available. Owners of small businesses in all 50 states; Washington, D.C.; and U.S. territories are eligible for this program.
This loan can be used to pay off fixed debts, payroll, accounts payable, and other bills that are a big burden during coronavirus.
Where to Apply for SBA Coronavirus Disaster Assistance?
You can find a streamlined process to apply for SBA Coronavirus Disaster Assistance on the SBA Disaster Assistance page.
Apart from the aforementioned programs, here are some more SBA loans for small businesses:
- SBA Express Bridge Loan (EBL)
- SBA 7(a) Loan Debt Relief
- SBA Business Expansion Loans
Also Read: Best Home Improvement Loans for 2020
We hope this blog helped you to understand small business loans more clearly!