We’ve been hearing feedback from some businesses that SBA loans aren’t applicable to them, don’t provide enough funding and other resistance. Please take a few moments to acquaint yourself with the SBA loan programs including the Paycheck Protection Program Protection Program (which offers loans up to $10 million for impacted businesses and can, in some cases, be forgiven and converted to a grant), and the Economic Injury Disaster Loan. The Kaufman Foundation summarizes some other differences below.
“Congress has authorized $349B in small business lending with two goals:
- Help small businesses cover their near-term operating expenses during the crisis.
- Provide cash incentives for entrepreneurs to keep their employees.
This program is intended to help you replace your revenue during this period of severe disruption. In short, there are three major benefits:
- Larger loans than typical SBA loans. The maximum loan size for businesses is equivalent to 250 percent of the employer’s average monthly payroll costs (e.g., roughly 10 weeks of payroll expenses) or $10 million, whichever is less.
- You are eligible for loan forgiveness equivalent to major expenses (staff, rent, utilities, and more) during the eight-week period under which the loan is originated.
- Since many businesses have already been forced to lay off or furlough employees, the program also includes a clause that allows you to qualify for loan forgiveness, up to $10,000 per employee, if you re-hire back to your staffing level pre-crisis (February 1, 2020) by June 30, 2020.
The bottom line: if you keep your doors open as a business and keep your staff employed, your SBA loan converts to a grant.”
When in doubt, apply for the SBA loan. The sooner you get your business in the line, the sooner you may get relief.