The year 2020 has brought on significant challenges for small businesses during the global pandemic, COVID-19. With most states enacting some form of a shutdown, small businesses are struggling to stay afloat and keep up with bills and payroll obligations.
Many businesses have already had to lay off or furlough some of their employees. Business owners are counting down the days until they can open their doors again, but until then they need to utilize the resources available to them.
What issues are small businesses facing during COVID-19?
Supply chain interruptions
Domestic and international supply chains have faced instability, pressuring businesses to diversify their distributors and scramble to make inventory adjustments.
Access to capital
With many businesses facing a reduction in revenue being generated, issues like making payroll, covering rent, and maintaining inventory can become significant.
Changes in market demand
Issues like the general public worrying about exposure to COVID-19 and unemployment can have a large impact on the demand for small business products and services.
Accessibility problems
States have enacted restrictions that have shut down businesses deemed non-essential, making it difficult to sell products.
Access to cleaning/sanitation supplies
Small businesses face the challenge of purchasing adequate sanitation and personal protective supplies to maintain a clean environment for employees and customers.
Shipping complications
Covid-19 has had a heavy impact on shipping globally. Delays and increased costs are challenging business owners in receiving inventory and shipping out orders.
What resources are available to small businesses during COVID-19?
Loans
7(a) program
Eligible small businesses can receive loan amounts up to $5,000,000 to use for:
- Working capital
- Expansions, remodeling, or new construction
- Purchase of property
- Inventory
- Start-up costs
- Equipment
Express
Businesses will be approved or denied within 36 hours of the application submission for a loan of up to $350,000 for no longer than 7 years. The capital can be used in the same way as the 7(a) program.
Community Advantage
Loans up to $250,000 will be offered in underserved markets by mission-based lenders. Currently a pilot program. Proceeds can be used for the same needs as the 7(a) program.
504
A program designed to foster job creation and retention. The proceeds must be used for the acquisition or refinance of fixed assets.
Microloan
This program offers a maximum loan amount of $50,000 and uses non-profit lenders to administer the program in underserved markets. The money must be used for working capital, machinery/equipment, and supplies.
Funding options
Several temporary programs have been created to help small businesses during COVID-19:
Paycheck Protection Program
Provides an incentive to keep employees on the payroll by providing loan forgiveness for SBA 7(a) loans.
EIDL Loan Advance
Offers a loan advance for up to $10,000 for any business with less than 500 employees that is experiencing a temporary loss of revenue.
Express Bridge Loan Pilot Program
Provides businesses that already have an established relationship with an SBA express lender the ability to access up to $25,000 quickly.
SBA Debt Relief
For eligible businesses, the SBA will pay six months of principle, interest, and fees the businesses owe for certain loan programs.
State programs
The Council for Community and Economic Research’s website features an interactive U.S. map that tracks incentive programs currently being offered by each state.
Facebook Small Business Grants Program
Up to 30,000 small businesses in 30 countries are eligible for a grant.
Eligibility requirements:
- 2-50 Employees
- Not less than a year old
- Experiencing challenges from the pandemic
- Be near a location where Facebook operates
More information and the application can be found here.
Grant Watch
Grantwatch.com is a must-use tool for small businesses looking for economic relief from COVID-19. This website tracks grants for specific industries and geographical locations. Check here daily to avoid missing anything that may pop up.
Takeaway
The SBA is one of the best resources for finding information and programs for small business economic relief. Various organizations are also providing grants across the nation. These resources should be utilized in every capacity to provide businesses much-needed relief during the COVID-19 pandemic.
