Business Loans

Small businesses has been the most adversely effected form of business affected by the corona virus pandemic. An adverse effect that is devastating in itself and might close up small businesses.

Things that were done in response to the crisis

In response to the crisis, the senate established; the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide relief for small businesses.

With $349 billion for the new Paycheck Protection Program (PPP); the provision of federally backed loans up to $10 million for qualified small businesses and nonprofits.

The CARES Act also lift some restrictions for other SBA programs like the SBA 7(a) loan support program and Emergency Injury Disaster Loans (EIDL).

Here, we review some loan options to help you navigate the coronavirus crisis.

• Paycheck Protection Program

The PPP was created under the CARES Act in view of the strains the coronavirus pandemic might have placed on small businesses. PPP was established by the CARES Act and implemented by the Small Business Administration (SBA) Section 7(a) with support from the United States Department of the Treasury.

The PPPs aids small businesses by providing you with resources to fund payroll, hire back employees that were laid off due to the pandemic, pay interests on rents and mortgages, and cover utilities. Click here for more on small business paycheck protection program.

What qualifies me for the loan? You might ask. To be eligible for PPP your business must have been in operation since February 15, 2020 and must have had 500 or fewer employees under your pay roll. Your business must also be able to meet the applicable SBA size regulations for the specific industry. As long as you meet the listed program’s standards you become eligible and can apply.

• Emergency Injury Disaster Loans (EIDL)

The Emergency Injury Disaster loan is also part of the SBA’s plan to provide economic relief to small businesses all over the country. Every small business owner is eligible for a sum of $10,000 after application and due consideration. The loan is given without any intent of repayment.

Acquisition of the loan helps small business owners to overcome economic stress as regards the temporary loss of revenue and payment of fixed debts. This program is essentially for small business with a fewer than 500 employees. Learn more about emergency injury and disaster relief loan programs.

Meeting all their standardized SBA requirements like a tribal small business concern qualifies you for the loan. EIDL availability is from January 31, 2020 through December 31, 2020.

• Emergency Grant

Emergency grants can be applied for alongside an EIDL. As a matter of fact you can request for it from the EIDL administrator. The good thing about this grant is that even if your EIDL request is not approved, you can still get this emergency grants.

It is also provided by the government for small business owners without any intent of repayment. Emergency grants are available till December 31, 2020.

This program can be gotten alongside the PPP and your outstanding loan debt accrued as a result of the pandemic will be forgiven.

The kind of relief all the options mentioned above will provide small businesses cannot be overemphasized. Small business owners should embrace one of the options and apply. These programs were put in place for you, small business owners.

Amidst the tough economic times, you may be considering soliciting for funds for your small business. Acquisition of loans for Small businesses have always proven to be difficult due to the risk the lender has to come to terms with. Without proper business finance, your dreams of becoming an entrepreneur might become shattered.

So, how do you get a business loan? What does it entail? Should you be terrified? Bank or online lender, which is advisable? Fear not I tell you! For every lender uses certain requirements to evaluate your ability to pay back. These requirements are common to most lenders and here are a few;

• Personal credit score

It’s a new start up and your business doesn’t have its own credit score yet? Then your personal credit score bears all the weight. Personal credit score evaluates and guarantees your ability to repay loans. Paying bills on time is expedient to building credit score. So, don’t worry if your business is new, with a stellar personal credit score your application might be granted. Click here to know how personal credit can affect your business loan application.

• Time in business

It is important to note that the length of time that your business has been running is very paramount to loan approval. Most lenders have reservations about businesses that just started. So, if you’re a new small business owner you can expect a dose of cynicism from lenders. This as a result of the fact that they are unsure of your business, thereby giving you shorter payback period.

• Business plan

Lenders do not depend solely on stellar credit scores alone. Lenders want to know the kind of business they are investing. They want to know that the business can get financial returns that is enough to pay back the loan. With a well written business plan, you’re able to convince them of your capability to pay back.

To put the mind of the lender at ease, your business plan must be comprehensive and professional. The better your business plan, the higher your chances of being qualified for the loan

• Business industry

Some industries are easier to explore and gain from than others. The competition within the industry you’re in and its lucrativeness gives the lender a hunch as to if you will make profit. Loans are all about risk and returns, if the lender cannot project your returns you’re more likely to not qualify.

• Bank statements

Bank statements are imperative in assessing the income of businesses and how they use their revenue. This requirement will go a long way in ensuring the lender that your business has the capability to pay. It also gives them a sense of your managerial skills as pertaining business funds. Learn more about acquiring small business loans.

Small business loans have proven difficult to acquire time after time. Maybe because loan terms depends on a lot a factors. The fact that these factors are numerous might discourage you from applying for a loan but it shouldn’t. By using all the aforementioned tips in this post and also improving every area of your business, you stand a chance of getting your loans approved. So much so that you are better advantaged and at greater chances of qualifying.