This post originally appeared on startupnation.com/start-your-business
President Trump’s instruction to the Small Business Administration to make $50 billion in SBA loans for COVID-19 available to small businesses impacted by the coronavirus may not only be good for Main Street, it’s potentially good news for all our friends and neighbors who work in those businesses.
The President’s efforts to get out ahead of the economic impact of the virus may prove important to small businesses who will likely find themselves strapped for cash as more and more people stay home to weather the coronavirus storm.
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“I am instructing the Small Business Administration to exercise available authority to provide capital and liquidity to firms affected by the coronavirus,” said the President in last night’s address to the nation from the Oval Office. “Effective immediately, the SBA will begin providing loans in affected states and territories. These low-interest loans will help small businesses overcome temporary economic disruptions caused by the virus. To this end, I am asking Congress to increase funding for this program by an additional $50 billion.”
Although there is a desire on both sides of the aisle to mitigate the negative impacts of the virus on small businesses, there is not yet agreement regarding how to tackle the challenges, and so the funds President Trump discussed aren’t yet flowing to businesses around the country. Both parties are putting forward proposals to address the health crisis, including a bill being presented today by Sen. Marc Rubio of Florida, who is Chair of the Senate Committee on Small Business and Entrepreneurship. Senator Rubio (R-FL), will introduce a bill to the Senate allocating the $50 billion President Trump called for in his address to the nation.
“By increasing the SBA’s current 7(a) loan program by $50 billion, this program, which is offered by banks across our nation, will provide small businesses with access to much-needed capital to make payroll and provide paid sick leave for employees who miss work as a result of the coronavirus,” said Chairman Rubio. “Additionally, this proposal will waive all fees for 7(a) loans for one year for both lenders and borrowers, as well as increase loan guarantees. These are decisive steps that I believe will enjoy bipartisan support, and I am hopeful that every one of my colleagues will join me in this effort to prevent people from losing their jobs and our small businesses from going bankrupt.”
Although there is some disagreement as to the specifics of the President’s proposal in the Congress, Larry Kudlow, a senior economic advisor to President Trump said, “We are working on details right now. We’re checking with the leaders of both parties of both houses to see what is doable.”
Related: WJR Business Beat with Jeff Sloan: The Impact of Coronavirus COVID-19 on Businesses (Episode 10)
What will this mean for the average small business?
If the Senator’s bill is approved, the SBA loan guarantee program will make the financing available through its network of participating banks and credit unions. The Small Business Administration isn’t a lender, but rather guarantees the loans offered through the 7(a) loan guarantee program. However, there is some discussion about the loans being offered through the Disaster Loan Assistance program. If you’re interested in understanding what you would need to apply through the Disaster loan program, the SBA has a great guide.
What if you need funding faster?
Although we don’t have a timeline for the release of the SBA loan guarantees suggested by the President last night, there remains a number of options available to business owners needing capital to wait out the temporary cash crunch caused by the health crisis.
Disaster relief already allocated
Congress has already allocated $8.3 billion to assist small businesses battling the coronavirus as part of an emergency spending package that was passed on March 4.
Zero percent APR business credit cards
If you need access to capital quickly, a business credit card can be a good option. Especially given the recent cuts to the Prime Rate by the Federal Reserve, which means credit card APRs will likely lower in the next few weeks. American Express®, Discover®, Capital One® and Bank of America® all offer 0 percent APR business credit cards that could help your business access needed capital to meet budget shortfalls during the health crisis.
A business line of credit
A business line of credit is a time-tested way for a small business to have quick access to cash to meet an unanticipated need. The upside of a line of credit is you pay for what you borrow, but know the full line is available if you need it — a good option for business owners who haven’t been hit yet, but want to be prepared nonetheless.
A business term loan
The short applications and quick decision-making make it easier than ever for a small business to apply for an online term loan. An application can often be completed in a matter of minutes with an answer in 24 hours or less. What’s more, funds can be electronically deposited in your account within days.
This article originally appeared on Nav.com by Ty Kiisel
The post Do You Qualify for the $50 Billion in SBA Loans for COVID-19? appeared first on StartupNation.