At the height of the COVID-19 pandemic, millions of Americans were worried about health concerns in addition to maintaining their businesses. As the stay-at-home orders continued for months and months, SMB owners continued to struggle. According to the National Federation of Independent Business Survey, over 75% of small businesses were affected negatively by the global pandemic. The problem was that it was difficult even for experts to predict when the situation would ease.

Unless your business sold rubbing alcohol and hand sanitizers or worked on a vaccine, we’re sure that your business must be affected one way or another. In troubling times, the survival of a business can be supported by a loan. Below are the best loans we recommended t help businesses during difficult times.

CARES Act – Paycheck Protection Program

The CARES Act is an economic stimulus bill passed in March of 2020 which provided $2.2 trillion worth of emergency assistance in response to the COVID-19 pandemic. For SMBs, the Paycheck Protection Program (PPP) is the most relevant measure in this act since it allocates $350 billion for business loans.

The PPP goes beyond the scope of regular SBA loans which are provided by private lenders and supported by the Small Business Administration. The Paycheck Protection Program was offered to businesses with less than 500 employees. This includes independent contractors, self-employed individuals, and sole proprietors. A business was required to show that they had been impacted by the COVID-19 situation to get a loan.

The loan can be used on employee salaries, payroll costs, mortgage interest payments, rent, and utilities, group health care benefits, and other debts.

Loan Amount: $5K to $5M

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The Paycheck Protection Program has the following features:

• Set to run until August 8th, 2020

• 10-year maximum term

• A business can get 2.5times its monthly average payroll expense with a $10 million limit

• 4% maximum interest

• No personal guarantee or collateral required

• No prepayment charges

• Typical fees with SBA loans are waived for loans from the PPP

Aside from the Paycheck Protection Program, the SBA also offered three other loan programs to help businesses weather the difficult period.

SBA Express Bridge Loan: If your business has an existing relationship with a lender linked to the SBA, you can get funding up to 425,000 with fewer documentary requirements.

SBA Debt Relief: The Debt Relief Program is part of the CARES Act and mandates the Small Business Administration to provide relief to SMBs that currently have a 504 loan, SBA 7(a) loan, or a microloan. SBA will cover six months’ worth of principal, interest, and fees. New borrowers that apply for a loan within 6 months of the CARES Act enactment can also access this program.

Economic Injury Disaster Loans and Loan Advance: Under this program, SBA-authorized lenders give the small business up to $2 million for working capital to help them with the loss of revenue. Business owners can apply for an advance of up to $10,000.

Other Loans for Small Businesses

Line of Credit

A business line of credit gives you some breathing room by letting you access funds you need whenever you need them. These funds are typically available for use within 24 hours making a line of credit a practical option to cover immediate expenses. You will only pay interest on the amount that you used.

Short Term Loan

Short-term loans are also called bridge loans. These give you access to capital with some lenders disbursing funds as fast as 24 hours.

Home Equity Loan

A home equity loan is technically a mortgage. But some borrowers can also use the funds for their business expenses. With a home equity loan, you borrow funds by using the current value of your home as security. You can borrow bigger amounts with a reasonable interest rate.

Invoice Factoring

For businesses that have customers with pending invoices, invoice factoring is one option to look at. You can sell unpaid invoices to a lender at a discounted price.

Minimum credit score: 620

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Conclusion

The COVID-19 pandemic was an extremely challenging period for my business owners in the US. The US government offered relief programs in response to the difficulties of the time. But there are also permanent loan programs available for small businesses that need funds due to other reasons.