Small Business Loan Resources & Guides For Businesses Affected By The Coronavirus

The global coronavirus pandemic and the resulting loss of consumer demand is placing unprecedented stress on small businesses that have had to either scale back or shut down completely. Other businesses in select industries may be experiencing the opposite: so much demand that they are struggling to meet it under emergency conditions. There’s no way to sugarcoat it: rough times are ahead, but don’t assume that means your business is doomed.

At the time of writing, the federal government is still shaping its response to the unfolding coronavirus pandemic and the accompanying economic fallout, so a lot of questions remain with regard to what kind of relief will eventually be available. In the meantime, there are some resources you can immediately tap that can either directly extend credit to you, or help guide you to it.

4 Small Business Organizations That Can Help You Get A Loan

The Small Business Administration (SBA)

In the best of times, the SBA serves as a loan guarantor, making it easier for small businesses to get approved for high-quality loans originated by other lenders. It will continue to do so during the COVID-19 crisis, but during times of disaster, the SBA offers some additional help.

The most notable program comes in the form of Economic Injury Disaster Loans. Unlike typical SBA loans, these loans are federally issued, offering low-interest cash-infusions to businesses within designated disaster zones. With regard to COVID-19 in particular, this includes states whose governors have requested aid under the Coronavirus Preparedness and Response Supplemental Appropriations Act. At the time of writing this includes:

• California
• Connecticut
• Delaware
• Washington, DC
• Florida
• Georgia
• Indiana
• Maine
• Massachusetts
• Montana
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• North Carolina
• Rhode Island
• Utah
• Washington

Note that even if your state isn’t on that list, certain counties within your state may still be eligible.

Economic Injury Disaster Loans provide up to $2 million in funds to affected businesses and can be used to pay debts, accounts payable, and other bills that can’t be paid due to disaster conditions. The loans carry a 3.75% interest rate for small businesses and a 2.75% interest rate for non-profits.

Community Development Financial Institutions

Many CDFIs, such as credit unions, offer low-interest loans and other types of financial assistance during natural disasters. These programs tend to be dependent on federal funding, so keep an eye on stimulus relief bills being proposed at the federal level. If you aren’t sure what your local ones are, you can download a list of certified CDFIs through the U.S Department of Treasury site.

Once you’ve found your local CDFI(s), check their websites to see what kinds of programs they offer. In addition to the aforementioned loans, many will offer advice and consultation to businesses undergoing disaster conditions.

SCORE

SCORE is the largest network of business advisors in the U.S. During normal times they offer mentoring, webinars, courses on demand, and a library of online resources. The good news is that most of these things can still happen during a quarantine and, with the exception of in-person events, they still are.

While they can’t directly get money into your hands, they can advise you on the best course to get money as quickly as possible. If you’re feeling lost about what to do and you’re stuck at home, SCORE is a great resource you can tap without stepping foot outside. They’re currently producing a lot of coronavirus-related content on their website and updating frequently, so park your browser there for new developments as the crisis unfolds.

Internal Revenue Service

So, okay, you’re probably not going to get a loan from the IRS, but you may have suddenly found yourself with a lot less money to meet your tax obligations. Luckily, it looks like they’ll be cutting you a break:

Following President Donald J. Trump’s emergency declaration pursuant to the Stafford Act, the U.S. Treasury Department and Internal Revenue Service (IRS) today issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest.  The guidance also allows corporate taxpayers a similar deferment of up to $10 million of federal income tax payments that would be due on April 15, 2020, until July 15, 2020, without penalties or interest.  This guidance does not change the April 15 filing deadline.

I’d recommend checking in with the IRS site’s coronavirus page from time to time in order to keep up with developments. They also provide links to other resources that may be of use to you.

What To Do If You Need Fast Funding

On the other hand, if you’re a business that is experiencing higher-than-normal demand during the COVID-19 crisis, you may be dealing with a different kind of problem. Perhaps you need to get ahead of your inventory or purchase equipment to deal with the increased stress on your business. In that case, you can probably take a more mundane route to get funding

While there will no doubt be instability in the lending market for the foreseeable future, lenders are often some of the first institutions to receive federal relief in times like these. Appetite for risk will vary by the lender, but some will likely be looking for borrowers who seem like a safe investment. Note, I’d strongly caution businesses that have had to cut back or temporarily shut down operations against seeking high-interest financial products at this time; the expense can easily balloon out of control if you’re not able to keep up with payments. Debt collectors are the last thing you want to add to your plate right now.

If you need a loan quickly, I’d recommend taking a look at our top-ranked small business lenders for 2020. Bear in mind that some may or may not be lending as normal at this time.

A simpler option for short-term financing,  particularly right now, may be a business credit card. While the interest rates on credit cards can be extremely punishing, if you pay off your balance each month you’re effectively getting a “free” extremely short-term loan. This can be useful for smoothing out your cash flow and making direct purchases. Many also come with lucrative rewards programs that can allow you, if you play your cards right, to actually save money by using a business credit card. Check out our guide to getting a quality business credit card fast for more info. And read about How To Use (& And Avoid Using) Business Credit During The Coronavirus Pandemic.

If you’re falling behind on credit card payments right now due to diminished business from the pandemic, our guide about how you can get help from credit card issuers might be useful.

Learn About Small Business Loans From Our Resources

Finally, we have a lot of content on this site that deals with how to find and apply for loans under various circumstances. Much of it will still be relevant during the COVID-19 crisis (and you can expect us to continue updating and adding to it as circumstances change and various federal relief packages start to come online).

If you’ve never had to apply for a business loan before, we can walk you through the process of where to look and how to apply. Given the volatility of the moment, you probably also want to take stock of whether or not you can afford a small business loan. We can also help you figure out how strong your business loan application is.

And be sure to check back in with us in the following weeks as we try to bring you the best, most current information about how your small business can weather the storm.

Merchant Maverick is currently offering a hub of resources and information for small business owners during the coronavirus pandemic. Learn about taking your business online or accepting payments online going forward, figure out how your restaurant can survive the pandemic, read some tips from our remote team about working from home with kids.