Small Business Administration Loan Stimulus for Coronavirus: FAQ
This post was updated on 3/18 to include information about an additional $250 billion SBA stimulus package announced by President Trump.
The novel coronavirus has now infected over 1,300 people in the United States. The NBA, MLB, and Live Nation all canceled or suspended upcoming games and events, with the possibility of things picking up in the coming months. Small businesses have been hit by the coronavirus impact too, but Trump’s new small business administration loans stimulus will curb some of the more harsh effects.
On March 11th, Trump announced a $50 billion stimulus package designed to help small businesses keep their momentum in an otherwise thriving economy.
Trump then upped the ante on March 17th by announcing an additional $850 billion stimulus package, $250 billion of which would also go to the SBA to make low-interest small business loans more available.
This coronavirus SBA loans package will help small businesses in affected areas take actions to drive growth, as well as continue to pay employees while consumer demand shifts to the essentials.
Overall, this SBA stimulus puts more money into the pool for low-interest, SBA-backed loans. Previously, competition for these desirable loans was fierce. With more funding available, getting an SBA approval will be easier than ever—and if you were declined previously, you may now qualify.
National’s Hybridge® SBA Loan can help your business get bridge funding to cover immediate expenses, and qualify for a low-interest SBA loan in as little as 45 days. Through other processes, SBA funding could take an additional 120 days to obtain.
Below, we’ve created an FAQ that will help you understand how Trump’s SBA funding increase will affect your business. Here’s what you need to know.
SBA Funding Increase For Coronavirus Affected Businesses: What Does It Mean?
During his speech, Trump instructed the SBA to make low-interest loans more readily available to businesses in areas affected by the coronavirus. As a result, the SBA will have the resources (an additional $50 billion to back bank loans) for increased approvals.
While the coronavirus SBA loans are a recent development, disaster loans are by no means new. The SBA routinely helps small businesses in regions impacted by disasters (normally natural disasters) by increasing funding approvals.These loans are generally reserved for businesses that have difficulty meeting normal expenses due to disasters.
Adding $50 billion to the pool of available funds for backing bank loans is by no means a low number. In 2019, the SBA guaranteed over $28 billion.
Assuming small business owners in areas affected by coronavirus take advantage of this incentive, the total annual backed funds could double.
Are SBA Disaster Loans for Coronavirus Available Now?
While Congress must still vote to approve this stimulus package, it seems likely the measure will pass. At the moment, there are also no clear guidelines about where funding packages will be available. However, it seems likely that the states impacted most by the coronavirus—Washington, New York, and California—will be included.
As of now, the SBA is still accepting loan applications from all businesses. But before they can access disaster-specific funding, states must take action.
First, the governor of the state must petition the SBA for a declaration of disaster. If the declaration request is approved, then businesses in the state will be able to access funding. You can track which states have received a declaration here.
Through this coronavirus disaster loan program, the SBA can back up to $2 million in funding for a business. The terms available are capped at 30 years, with rates starting around 3.75%.
Funding from coronavirus disaster SBA loans can be put toward any expenses that the virus may prevent you from covering, including:
- Paying fixed debts
- Accounts payable
- Other expenses that the virus might trigger
Depending on your state’s progress, you may not be able to access a disaster loan right away. However, National’s Hybridge® SBA Loan program can help you obtain the funding you need faster. Additionally, you can qualify for an immediate bridge loan and receive funding in just a few hours.
SBA Government Disaster Office Information
So, you’re interested in applying for a coronavirus disaster loan. Is your business eligible? There’s no reason to stay in the dark—the SBA office is available to help you through this crisis.
You can contact the SBA directly for information about funding options in your state, as well as whether or not your business may qualify.
You can call the SBA directly at 1 (800) 659-2955, or email firstname.lastname@example.org.
However, with modern funding options available, it may not make sense to take on the SBA process alone.
At National, our expert Business Financing Advisors specialize in helping you through the financing process. In addition to helping you complete the extensive paperwork, our Business Financing Advisors can also help to expedite the process.
Whether you pursue a standard coronavirus SBA loan or our exclusive Hybridge product—which includes an immediate bridge loan—assistance can go a long way.
Income Tax Payment Deferment: How Will it Help?
In addition to widening the pool of guaranteed SBA loans, Trump also took decisive action to help small business owners address a universal pain point: taxes.
Trump delayed the tax deadline, giving business owners the breathing room they need to make these payments.
As tax deadlines loom on the horizon, many small business owners are scrambling to pay bills. If your business is losing sales due to the coronavirus, then this extension could make a substantial difference.
This deferment is intended to help small business owners in areas that have been impacted by the virus. As U.S. Treasury Secretary Steven Mnuchin noted, this rule may not apply to larger companies that still have the means to pay taxes.
While Trump has not yet provided a new deadline, any assistance can go a long way. If you operate a small business, then it will likely benefit you. Nonetheless, it’s best to err on the side of caution by preparing to pay taxes.
To learn more about how this affects your business, speak with your accountant or tax advisor.
Payroll Tax Relief: How Far Will It Go?
Trump’s tax efforts didn’t stop with income taxes—he’s also calling for measures to help small business owners with payroll taxes.This measure will aid in minimizing both layoffs and hour cuts that some business owners may otherwise take to manage costs during the coronavirus pandemic.
Some officials have reported that he didn’t just request a cut, but a 0% payroll tax. This proposed cut would last for the duration of 2020.
This tax cut would cover the whole spectrum of payroll taxes, including:
- 6.2% tax on employee wages above $137,700 (paid by both employees and employers)
- 1.45% tax employees pay for Medicare taxes (paid by both employees and employers)
- .9% Medicare surtax (applicable to those filing for over $200,000, and $250,000 jointly)
- 6% federal unemployment tax on wages up to $7,000 (paid by the employer)
Overall, this coronavirus payroll tax relief will help small business owners keep operations moving without overspending.
SBA Disaster Assistance: How Can You Qualify?
The SBA’s disaster assistance program is not new to the coronavirus pandemic.
This SBA program helps small businesses in areas that have been affected by disasters (typically natural ones) access low-interest loans. Recently, the SBA has provided funding for businesses impacted by Hurricanes Michael & Florence.
As small businesses across the country encounter new challenges, the SBA will continue supporting them by offering new funding solutions. This funding is available for two primary purposes: physical damage and economic injury. In the case of the coronavirus, it would primarily help with economic injury.
Business Loans For Coronavirus Challenges
If your business has been affected by the coronavirus and you need funding, you’re not out of options. National has a variety of funding solutions that can help:
- Hybridge® SBA Loan: The ideal solution for businesses seeking an SBA loan. You’ll receive immediate bridge funding and an SBA loan in as little as 45 days, instead of the normal 180.
- Business Line of Credit: The best option for businesses that need funding, but aren’t sure how much. You can draw more as you need it, and only pay interest on what you take. Funding will become available again as you pay it down.
- Small Business Loan: Access a wide variety of options depending on your business’s needs. Choose the solution that works best for your business, and access competitive rates, amounts and terms.
Through our marketplace of 75+ lenders, you can choose from multiple offers that work for your business.
Applying takes less than a minute, you can learn your options immediately, and get funded in just a few hours.
National Business Capital & Services is the #1 FinTech marketplace offering small business financing and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.
Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.
We strengthen local communities one small business loan at a time.
For every deal we fund, we donate 10 meals to Feeding America!