The United States Small Business Administration (SBA) has provided two loan options to support small businesses: The Disaster Assistance Loan and the Payroll Protection Program. Let’s break down the two and see how they might apply to your business.
Learn how to use SBA Emergency Loans.
Two SBA Emergency Loans
The SBA offers two emergency loan options. Each option requires different information, and eligibility for each differs. Depending upon your unique situation, you may qualify for one or both. However, if you have specific questions about either choice, consult a professional. The information provided here just gives you a broad overview.
The two choices offered:
- The Disaster Assistance Loan
- Payroll Protection Program
Beyond these two SBA emergency loans, a variety of resources exist to support small businesses during the time of coronavirus.
The Disaster Assistance Loan
Businesses impacted by the COVID-19 pandemic may apply for this loan. Recipients may use the proceeds to pay debts, payroll, accounts payable, and other obligations.
The SBA offers up to $2,000,000 through this loan program. The loan term: 30 years and interest at 3.75% for ordinary businesses and 2.75% for private non-profits
Note that this loan offers a $10,000 advance for those who apply. You need not repay the advance if you don’t receive the loan.
Apply for the loan here: https://www.sba.gov/funding-programs/disaster-assistance
Also note, you do not need to have a specific business entity type to apply. You can apply even if you operate as a sole proprietor.
The Payroll Protection Program
The second of the SBA emergency loans: The Paycheck Protection Program.
The Payroll Protection Program helps businesses maintain payroll and keep workers employed. It covers the payroll period from 2/15/2020 to 6/30/2020.
A business may receive up to $10,000,000 through this loan.
SBA and Treasury-backed banks provide the loans.
To be eligible, you must have been in business as of March 1, 2020. As with the other SBA emergency loans, any type of business entity may apply for this loan. You may apply even if you paid independent contractors rather than employees.
Note that the SBA may forgive part of this loan used for payroll expenses.
Seek more information here: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp
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