Do You Need Alternative Business Funding Due to COVID-19?

With the coronavirus shaking up the world and locking everyone in their homes, small businesses are suffering under the weight of staying afloat against impossible odds. Amid the rising crisis, President Trump called for an additional $50 billion loan increase to help ease the strain on small businesses from the Small Business Administration. Through the SBA's Economic Injury and Disaster Loans, eligible businesses can get the help they need to pay bills that can't be otherwise paid because of COVID-19's impact. Though there is no official word on when this expansion will be open, as it still needs congressional approval, it's essential to start thinking about need now about what options there are for your funding through this crisis. 

The CARES Act

Additionally, the CARES Act, or the Coronavirus Aid, Relief and Economic Security Act, has been officially signed into law as of March 27th, 2020. This Relief Act is a 2 trillion-dollar package that can impact multiple groups to help bring relief to the economy. For small businesses, the proposed relief is emergency grants for quick aid and forgivable loans. Companies with 500 employees or fewer are eligible to apply for both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan program (EIDL) and additional aid through tax credit and debt relief. All of this is in an effort to allow small businesses to stay afloat and keep their employees despite these difficult times. 

Paycheck Protection Loans have a max borrowing amount of the lesser of either $10million or 2.5x the average monthly payroll costs for a term length of 2 years. The availability of this program is through till June 30th, 2020 and has an interest rate of 0.5%. Alternatively, The Economic Injury Disaster Loans have a maximum borrowing amount of $2,000,000 with term lengths up to 30 years and an interest rate of 3.75%. There are also proposed SBA Emergency Cash Grants for small businesses that have been operating since January 31st, 2020. The maximum borrowing amount is $10,000 and is available from January 31st, 2020, to December 31st, 2020 and doesn't need to be repaid. Small Business Debt Relief Program requires businesses already have an existing SBA 7(a), 504 and microloans or be new borrowers who take out SBA loans within six months of the CARES act. The term length is six months and can cover all loan payments, including principal, interest and fees, for six months. Also included in the CARES act is an Employee Retention Credit with the eligible small businesses that have been forced to suspend operations due to COVID-19. The maximum credit is up to $5,000 per employee and is available through December 31st, 2020. However, if you receive PPP you are ineligible. 

The CARES Act covers a lot of bases, and the SBA is doing all they can to attempt to keep businesses going throughout this crisis. Unfortunately, there are always cracks to slip through for small businesses. Some companies desperately need cash now in the mounting impacts of the coronavirus on their businesses. There are still other options in the cases of ineligibility for the aid that CARES is proposing. There are also other forms of financial assistance if your needs don't apply to the relief being offered by CARES.

Merchant Cash Advance

This solution can help businesses by giving them a lump sum of capital with the exchange of a small percentage of future credit card or debit card sales. For some small business owners, this exchange is easier to handle than more substantial loan payment requirements. The approval amount could be anywhere between $5000 - $500,000 and an interest rate of 18% to 40% and a repayment term of 4 to 18 months.

Unsecured Business Line of Credit

This option gives you the flexibility to draw on your credit and only pay the interest on the amount of actual funds that were borrowed, requirements of a monthly revenue of $25,000, minimum FICO 620 and a minimum of 6 months in business. Approval amounts can be between $10,000 to $500,000 with a repayment term of 6 to 12 months with interest rates starting at 12%. 

Unsecured and Secured Business Loans

Unsecured business loans are supported only by the business owner's creditworthiness instead of collateral. Thus, the owner must have an excellent personal credit score to be approved for this form of loan. Whereas secured business loans that are secured by the asset(s) being acquired or that is already owned. This form of loan is more accessible to obtain than an SBA loan with a faster funding timeline and for a crisis like the coronavirus that could be incredibly critical. Requirements include a minimum of $100,000 annual revenue, and the business must have been in operation from 3 - 6 months. Approval amounts can range anywhere from $10,000 to $500,000, and repayment terms are business-specific based on future weekly or monthly revenue. 

The coronavirus has had clear and immediate ramifications on businesses big and small across America. There is no end in sight for when all of this will blow over, and your business may need help right away to keep your employees on the payroll and get through these very trying times. There are many options for businesses, depending on the urgency or nature of your business's crisis. It's critical to start acting now in the case of this global pandemic so that you can be confident you will come out of this in good standings whenever this ends, and to take the stress off you and your employees throughout this developing situation. Through the CARES Act, Merchant Cash Advance, Unsecured Business Line of Credit, or the Unsecured and Secured Business Loans, there are many options to look into when it comes to your business eligibility and your immediate needs for a business interruption aid of some kind. COVID-19 doesn't have to cripple your business further, through existing and coronavirus specific loans and grants, your business can make it through the pandemic.

Need Help or Fast Cash?

And, if these options don’t work for you, or if you need help obtaining this funding, or if you need cash faster, contact Drew Cashmere at South Florida Funding Group, an alternative business funding company,  who can assist you: 786-544-2700. 

Be Safe!