The Coronavirus Aid, Relief, and Economic Security (CARES) Act has successfully passed, and while it will take time for the Small Business Administration to implement the new programs (Paycheck Protection Program and Emergency Economic Injury Grant) and update an existing program (amendments to the Economic Injury Disaster Loan), there is action you can take to position your business to receive financial assistance sooner than later via the two programs outlined below (as well via local and state grants). Find more about the CARES Act and impact on small business loans HERE.
While these programs are designed to help small business owners who are enduring financial hardship as a result of COVID-19, keep in mind that every business’ financial need is different and these may not be the best solution for you. If you are approved for a loan and determine that it is not the right decision for you and your business, there is no penalty to decline the offer(s). If you do proceed, ensure that you use the funds exclusively for approved expenses only. If you need assistance evaluating the options, please email us and we’ll happily schedule a day and time to connect with you by phone.
Economic Injury Disaster Loan
The SBA is currently accepting applications from businesses nationwide as a result of COVID-19 under the Economic Injury Disaster Loan (EIDL) program. The link to the application can be found HERE.
While it may seem like a lot of “paperwork”, the newly approved Emergency Economic Injury Grant will provide an emergency advance of up to $10,000 to your business within 3 days of applying for the loan (or within 3 days of the program implementation if you have already applied). The advance does not need to be repaid even if you are not approved for the loan. As long as you were operating the business prior to January 31, 2020, your business is eligible to receive the grant. If you secure the Paycheck Protection Program loan in addition to the EIDL, the amount of the advance you received will be deducted from the forgiveness amount of the PPP Loan.
If applying, we recommend that you:
1. Complete the application to the best of your ability and as thoroughly as possible. Do not rush through the application. The less back and forth that you need to have with your loan officer, the faster the process will be.
2. Continue to check the status of your application online, but be patient as it will likely take a few weeks for the review. You can also reach out to your local SBA district office directly for assistance and updates HERE.
3. Apply at off-hours (very early or very late) as the website has recently been overrun during normal business hours.
Paycheck Protection Program Loan
Unlike the EIDL program which provides funding directly via the U.S. Treasury, you will need to apply for this loan directly through an approved SBA Lender offering the 7(a) loan program. The SBA has not released a list of SBA 7(a) lenders, but almost all commercial banks are qualified. The SBA does, however, have a list of the top 100 7(a) lenders, by volume, for 2019 which you may find helpful HERE.
The application process may open up as quickly as the end of this week, but the timeline is still undetermined. The SBA is currently working with lenders and their loan officers to ensure the program is appropriately in place prior to allowing applications.
If you plan to apply, we recommend that you:
1. Contact local banks in your area, especially if you already have an established banking relationship, to ask about the program and let them know you are planning on applying. You can also search nationwide banks’ websites for more information about their current 7(a) program to see what the application process entails.
2. Complete the PDF application ahead of time so that you are prepared to submit the application to your Lender when the program is released. The application can be found HERE.
While Rigquipment Finance does not provide SBA loans, we are absolutely here as a resource should you need any assistance and will continue to keep you updated as new information is released.