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Relief for Small Businesses During the COVID-19 Pandemic
Relief for Small Businesses During the COVID-19 Pandemic
As America, and the rest of the world, is shocked by the impact of the COVID-19 pandemic numerous small businesses are seeking financial help to weather the inevitable financial storm. While we await additional federal assistance, which is expected to benefit small businesses, those who are impacted by the COVID-19 Pandemic may qualify for small business loans from the U.S. Small Business Association (“SBA”). Further, central New York businesses may qualify for bridge loans, after being approved for an SBA Loan, from Onondaga County or the Syracuse Economic Development Corporation. The following is a brief summary of current options for financial assistance.
1. Federal – SBA
Economic Disaster Injury Loans
Small businesses may qualify for Economic Injury Disaster (“EID”) or 7(a) Loans through the SBA. EID Loans provide up to $2 million dollars at a rate of 3.75% for small businesses impacted by the COVID-19 pandemic. Long-term repayment plans (up to 30 years) are available, but specific terms depend on each applicant. Small businesses may apply online (https://disasterloan.sba.gov/ela/), but it is recommended that they contact their local Small Business Development Center for assistance with their application. The Onondaga Small Business Development Center is operating remotely, and local businesses may contact them at: http://www.nyssbdc.org/selector/ReqForCons/formi.aspx.
7(a) Loans
The SBA offers 7(a) (up to $5 million) and 7(a) Small (up to $350,000) Loans to small businesses in cooperation with other lenders. Under either program the SBA guarantees funding for a percentage of the loan based on the amount borrowed. The interest is based on lender terms, but may not exceed the SBA maximum (currently 4%). Typical processing time for these loans is 5-10 days. There are collateral requirements for loans in excess of $25,000.00. Borrowers should seek further information from lenders authorized to issue 7(a) and 7(a) Small Loans.
SBA Express
An SBA Express Loan is a small loan (up to $350,000), with a faster processing time than traditional 7(a) or 7(a) Small Loans. The SBA responds to SBA Express Loan Applications within 36 hours, but guarantees just 50% of the loan (as opposed to 75%-85% for 7(a) Loans). Terms are determined with individual lenders, but rates may not exceed the SBA maximum. There are no collateral requirements for loans up to $25,000; the lender must use its existing collateral policy for loans over $25,000.
2. New York State
New York State works in cooperation with the New York Small Business Development Center (NYSBDC) and the SBA to issue SBA loans. There are no loan programs unique to New York State to assist small business owners with COVID-19 related expenses at this time.
3. Central New York – Onondaga County and the City of Syracuse
Traditional SBA loans are approved in approximately 20 days and funded in approximately 90 days. Given the current financial turmoil being experienced by small businesses around the country, these processing and lending times are only expected to increase. Onondaga County and the City of Syracuse are both offering bridge loans to small businesses who have been approved for, but are waiting to receive, SBA loans. The $500,000 revolving funds will provide 0% interest short-term (180 days) loans of up to $25,000. The Syracuse application can be found at: http://www.syrgov.net/SEDCO_Home.aspx. Those interested in applying through Onondaga County can be assigned an advisor with the Onondaga County Small Business Development Center here: http://www.onondagasbdc.org/covid-19.html.
Additional funding options may be available for small businesses located in other regions. Further, federal, state, and local relief options are in flux in light of the rapid changing of events. This information will be updated as new relief options are released. For additional information or if you need legal assistance, reach out to your normal contact at the firm, or contact Melissa Green ([email protected]).
