Is COVID-19 Killing Your Small Business?
It’s Not Pretty Out There!
No one saw it coming that COVID-19 would be killing your small business today. And, no one imagined how disruptive it would be.
No one could anticipate the turmoil that this devastating virus would cause to everyone, both personally and financially.
One of the largest financial hardships, of this crisis, was felt by the Small Business sector.
Small businesses make up 44% of the U.S. Economy.
*96% of small business owners are feeling coronavirus impact…
*51% say their business will only be able to continue for 0-3 months
*according to a Goldman Sachs survey of more than 1,500 small business owners conducted March 16-17.
There are some small businesses that are thriving out there during the Covid-19 pandemic crisis as well.One of the largest financial hardships, of this crisis, was felt by the Small Business sector. #smallbusiness #smallbiz Click To Tweet
Help is in the Way if Covid-19 is Killing Your Small Business
Economic relief is on the way in the form of Small Business Administration (SBA) Loans and new stimulus packages that are currently being rolled out as this crisis continues.
The Federal Reserve is encouraging banks to lend to struggling businesses and to extend debt payments, for those that need it.
Applying for a small-business loan can be a major hurdle facing the small business owner.
However, it doesn’t have to be difficult, if you are prepared before you apply.Economic relief is on the way in the form of Small Business Administration (SBA) Loans and new stimulus packages that are currently being rolled out as this crisis continues. #smallbiz #SBA Click To Tweet
Steps Towards a Successful Business Loan Application
Ask yourself, why do I need this loan?
That is the primary question on the loan application. Lenders want to know exactly what you plan to do with the money. Will it be for to catchup on overdue bills incurred from the crisis?
Finally, will it be to cover the day-to-day expenses? The more specific you are when describing your loan purpose, the better the lender can serve your needs.
Decide which type of loan is right for you.
Your reasons for needing the loan will dictate the type of small-business loan you get. If
However, if your business is a year old or more, and you have revenue history, you have more financing options. You could apply for a Small Business loan, a term loan, or perhaps a business line of credit loan.
Currently, you may also be eligible for some “economic injury disaster loan options” currently available, during this time of crisis, such as the Paycheck Protection Program.
Determine the best type of small-business lender.
You can get small-business loans from several places. Then, you can apply with the SBA, your local bank, a credit union, a nonprofit micro-lender or an online lender. These lenders offer products such as term loans, lines of credit and accounts receivable financing.
You should approach small-business-loan shopping just as you would shopping for a car.
Once you determine which type of lender and financing vehicle are right for you, compare two or three similar options based on annual percentage rate (total borrowing cost) and terms.
Of the loans you qualify for, choose the one with the lowest APR, as long as you are able to handle the loan’s regular payments.You can get small-business loans from several places. Then, you can apply with the SBA, your local bank, a credit union, a nonprofit micro-lender or an online lender. #SBA Click To Tweet
Find out if you qualify.
Know your credit score! It is THE ONE MOST IMPORTANT FACTOR that will determine which loans you’ll qualify for.
You can get your credit report for free from each of the three major credit bureaus — Equifax, Experian and TransUnion — once a year.
Banks or Credit Unions offer the least expensive small-business loans. They favor borrowers with credit scores at least above 680.
Lenders will determine your interest rate based on 3 other major factors as well – but not limited to — How long you have been in business, Your previous net business income and your debt-to-income ratio.
This information is used to determine if you can afford the payments.Know your credit score! It is THE ONE MOST IMPORTANT FACTOR that will determine which loans you’ll qualify for. #SBA #smallbiztips Click To Tweet
Gather your Documents.
Once you’ve compared your options, it’s time to apply for the loan that fits your financing needs and those that you qualify for.
You can apply for multiple small-business loans within a short time frame (about two weeks) without a negative effect on your personal credit score.
Depending on the lender, you’ll need to submit a combination — but not limited to —the following documents with your application:
- Business and personal tax returns
- Or business and personal bank statements
- And business financial statements
Business legal documents (e.g., articles of incorporation, commercial lease, franchise agreement).You can apply for multiple small-business loans within a short time frame (about two weeks) without a negative effect on your personal credit score. #SBA #smallbiztips Click To Tweet
Quick Solution During Hard Times
As of this writing ✍️, you as a “Distressed Small Business Entrepreneur” can take advantage of a quick cash low interest loan through the Paycheck Protection Program.
Here are four Things you should know about the Paycheck Protection Program:
- These loans COULD be FREE, if they are used to retain or hire workers. Businesses with up to 500 employees can borrow money to be repaid over two years at an annual rate of 0.5%. The money that’s used to pay salaries can be forgiven, and a portion of money used for rent, mortgage interest and/or utilities can be at least partially forgiven. Payments are deferred for six months.
- You can apply through any federally insured bank or credit union, not just a traditional SBA lender. Many banks are accepting online applications through financial institution websites.
- The loan could be forgiven. The government will calculate how much of a loan will be forgiven after June 30. Right now, the program covers the period from February 15 through June 30. Owners will need to document how many workers they employed during that time and how many they were paid. If you laid off workers, you have until June 30 to rehire them —but the sooner you rehire and start paying them, the larger the loan forgiveness will be.
- Currently, the SBA is giving out what are called “Economic Injury Disaster Loans”. The fund must be used for payroll, operating expenses, filed debt payments and accounts payable bills. It cannot be used for payroll purposes if you are also getting a Paycheck Protection Loan.
In Conclusion of the Covid-19 Killing Your Small Business
Is the Covid-19 crisis killing your small business today? I’d love to know more in the comments below.