As an Atlanta website design company who works hand in hand with many small business owners, we see first-hand the strain this virus pandemic has put on all of us. Small business owners right now have no choice but to lay-off employees and even close down businesses for an unforeseen amount of time. One client in particular, a bankruptcy attorney in Atlanta, has seen an influx of new cases and thinks it’s only going to worsen.
According to Chase, the average business holds cash reserves to cover only 27 days of expenses. If this is you, you already know that the clock is ticking and soon you will run out of money to pay your bills and mortgage.
The CARES Act May Be Able to Help You
The CARES act (an acronym for Coronavirus Aid, Relief and Economic Security Act) is a stimulus package that can help small business owners going through financial hardships. The key here is to figure out which one you qualify best for:
Economic Injury Disaster Loans (EIDLs)
EIDLs were created in the event of a natural disaster. The Coronavirus was recently declared a new type of disaster. Now businesses nationwide are eligible to apply for ‘Economic Injury Disaster Loans.’
The SBA (Small Business Association) Offers Some Very Reasonable Terms in Their EIDLs:
Here are some quick notes on it:
- Loans for up to $2 million with a 30 year term
- Interest rates at 3.75% for small business and 2.75% for non-profits
- Your first month’s payment is deferred a full year from the date of the promissory note.
The EIDLs Expanded Provisions Include:
- EIDLs can be approved by the SBA based solely on the appicant’s credit score and not repayment ability.
- No tax return required
- Bankruptcies do not disqualify you
- Loans smaller than $200,000 can be approved without a personal guarantee and real estate is not required as a collateral.
- Borrowers can receive up to $10,000 (even if you don’t qualify for additional funds since it’s based on the applicant’s credit score) in an emergency grant cash advance that could be forgiven if it’s spent on:
- paid leave
- maintaining payroll
- increased costs due to supply chain disruption
- mortgage or lease payments or
- repaying obligations that cannot be met due to revenue loss
- Sole proprietors and Independent contractors are eligible to apply
- You can apply even if you already have an open credit line.
- There are no loan fees, guarantee fees or pre-payment fees.
How to Apply for the Small Business Loan
To apply directly via the SBA go to www.SBA.gov/disaster. When applying, be sure to apply for Economic Injury for the Coronavirus rather than physical damage due to a disaster. You have to have been in business since January 21, 2020 to qualify. For more information, visit www.sba.gov/coronavirus.
As of now, there is no guaranteed timeline as to how fast you’ll receive the money, so the best advice is to apply now.