Stimulus to the Rescue?
Just like Superman flying to the rescue, the federal government has issued a $2,000,000,000,000.00 ($2 Trillion) stimulus package. Now all is right in the world, rainbows fill the sky and unicorns are running across the land. (Cue laughter.)
We will be sending you a series of articles on the new stimulus program signed by the President. Within the 880+ pages of fine print and government speak, there are actually some terms of the package that are helpful to entrepreneurs.
Despite whatever politicians may have put in their press releases, unless you are Boeing or other large corporations there are no grants or handouts in this package that will benefit entrepreneurs.
This update will give you some information to guide you through the first phase of the process – obtaining money to help your business.
Paycheck Stimulus Loan:
In the stimulus package, an employer having under 500 employees can apply for a stimulus loan that equals 2.5 times their average monthly payroll for the prior year. This money can be used to pay employees, health insurance, taxes, mortgage payments, rent and utilities.
This part of the stimulus package is being administered through the SBA. This stimulus is not cash, but is in the form of a guaranty that covers banks who issue the “paycheck” loans. The only way to obtain access to these funds is to work through a lender who is part of the SBA 7(a) loan program. If you are unsure who is an SBA 7(a) lender in your area, a simple google search will find one or there is a list on the SBA website at www.sba.gov .
This loan can be forgiven depending on how many employees you can retain during this time. It is a sliding scale depending on how the funds are used and comparing the number of full-time employees to a specific time period.
SBA Disaster Relief Loans:
This loan program is a direct loan, which is applied through the SBA. If you go to the SBA website at https://www.sba.gov/disaster/apply-for-disaster-loan/index.html, the application is on-line. This loan is only applicable in counties throughout the United States, or adjoining counties where disaster relief has been declared. This same website lets you verify that your area is eligible for the loans. New counties are added frequently, so if you do not see your county listed, check back in a few days.
These loans can be made for up to $2,000,000.00 and can be used for any of the purposes which apply to the paycheck loan program. Under this loan program, you need to project what your losses will be under the current economic conditions and what it will take to carry your business through the current times.
The amount of the loan request will determine the amount of documentation required. We would recommend loans under $500,000.00 for the quickest response.
SBA Disaster Relief Loans – Express Bridge Loans:
If you currently have a relationship with an SBA certified express lender, you can obtain a short term $25,000.00 loan. This loan can either be repaid when the disaster loan is issued or converted to a term loan.
If you do not have a relationship with a certified express lender, a link on the following SBA website: https://www.sba.gov/disaster/apply-for-disaster-loan/index.html will connect with certified lenders in your area, by filling out a short one form.
Traditional SBA Loans:
Within the stimulus package are additional monies to temporarily expand the loan guaranties for the SBA program. These are traditional SBA loans and can be applied for through any SBA lender.
Just like unscrupulous contractors taking advantage of people after a natural disaster, the same is happening here. Already the internet is filled with companies offering to expedite the loan process. One ad even offers that for an “extra” fee your loan application can be “expedited” for approval.
DO NOT BE FOOLED.
There is no method to expedite the process. There is no extra fee that can be paid to move a loan higher up the approval list. The SBA only accepts on-line applications for disaster loans. For SBA 7(a) loans, bridge loans or the new paycheck loans, only approved SBA lenders may access the funds.
For your “expediting” fee all you receive is a company to type the application for you to file it, just as you could on your own. Many times, you will spend more time helping them complete the form than if you have done it yourself. Surprisingly, the loan application is simpler than many other government forms.
What is the quickest way to access these governmental stimulus funds?
- Find an SBA 7(A) lender in your area and apply for the paycheck loan;
- Apply on-line through each company you may own for a disaster relief loan and if necessary, an express bridge loan; and
- If you still need assistance apply for a traditional SBA (7)(a) loan.