As the cases of coronavirus, or COVID-19, continue to rise across the country, so does its impact on our economy.
Small Business Majority, a small-business advocacy organization, believes that entrepreneurs and small-business owners are essential for a community’s vitality, health and economic mobility, according to Mark Herbert, vice president of California SBM.
“Because of that, they really deserve everything that they need to be successful, especially when facing a health crisis like this that so significantly impacts businesses all across the state,” he added during a webinar hosted by SBM Wednesday. “It’s essential that they have the information that they need to make the best decision for themselves, their business and their employees.”
Unfortunately, SBM believes this is likely the beginning of an ever-changing situation and there’s plenty to come.
That being said, federal, state and local governments have all begun taking action in creating funding options to help business owners and employees alike.
The U.S. Small Business Administration announced Monday that it will be processing its low-interest, long-term disaster loans to businesses of all sizes, private nonprofit organizations, homeowners, and renters suffering substantial economic injury as a result of COVID-19.
“Substantial economic injury means the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses,” said Corey Williams, public information officer with the SBA’s Office of Disaster Assistance. “Economic injury disaster loans provide the necessary working capital to help small businesses until normal operations resume.”
These loans of up to $2 million with terms up to 30 years can help borrowers meet financial obligations and operating expenses, which could have been met had the disaster not occurred.
Loan amounts and terms are set by the SBA and are based upon the applicant’s financial condition. Those who already have loans can still get SBA disaster loans, Williams said.
While this option may not work for everyone, Mike Daniel, regional director representing the Small Business Development Center, suggests getting your documents ready for any other funding that might come available.
“San Francisco, Oakland and Alameda have started their own 0%-interest loan program, and I think you’re going to see a lot of other cities and counties jump on doing very similar things to help businesses get out of this,” Daniel said. “There are 4 million businesses in California and everyone’s hurting at this moment, so trying to get people funding is going to be a big deal and a big issue. I think you’re going to start to see a lot of (options).”
Claudia Moreno, Southern California outreach manager at SBM also suggests small businesses reach out to community development financial institutions, or CDFIs, who are catered to assisting those who lack access to financing, as well as community banks and credit unions.
“Their primary focus is to support small businesses and to ensure that the money is being circulated locally in the economy,” Moreno said.
Because so many small business owners are desperate for capital, there are also a number of predatory lenders out there looking to take advantage of that.
“They don’t ask for capital, collateral or your credit,” Moreno said. “It’s very quick and fast, which sounds great in theory, but unfortunately, right behind it comes with 100% interest rate or even higher and has put a lot of the small business owners that we chat with, unfortunately, out of business.”