There are a number of different options available for small businesses who need help during this pandemic. There are several existing federal loan programs, as well as ones introduced by the CARES Act and other responses to the COVID-19 pandemic. Here is an overview of what is available:
Paycheck Protection Program (PPP)
This program builds on top of the existing U.S. Small Business Administration (SBA) federal loan programs and provides forgivable loans to companies to keep employees on payroll.
Businesses impacted by coronavirus may be eligible if:
- They meet the SBA size standards (either industry-based size standard or alternative size standard)
- Their NAICS code begins with 72 (Accommodations and Food Service) with more than one physical location (fewer than 500 employees per location)
- They are sole proprietors, independent contractors, or self-employed individuals
This is a loan that is issued that will be forgiven if the company meets the following criteria:
- The loan goes to covering payroll costs, rent, mortgage interest, or utilities
- The company maintains full-time headcount
Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease.
The loan has a maturity of 2 years and an interest rate of 1%.
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
The initial pool of PPP money ran out on April 16, 2020, but was re-funded on April 24, with new applications accepted starting on April 27. As of May 1, 2020, the PPP is still open for new applications.
Economic Injury Disaster Loan (EIDL) Emergency Advance
Note: As of May 6, 2020, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received.
EIDL provides a loan advance of up to $10,000 for businesses with fewer than 500 employees (there are exceptions for organizations with more than 500 employees); the loan does not need to be repaid.
SBA Express Bridge Loans
For businesses who already have a relationship with an SBA Express Lender, this program provides quick access to up to $25,000, largely to provide support while awaiting other assistance. This loan must be repaid (at least in part) by the proceeds from an EIDL loan.
SBA Debt Relief
This program automatically covers all loan payments to borrowers participating in certain SBA programs (7(a), 504, and Microloans in regular servicing status and those disbursed prior to September 27, 2020; PPP loans and disaster loans are not included in this program).
You can still apply for the qualifying programs:
- 7(a): Provides up to $5 million for borrowers who lack credit elsewhere. Find out more about the different types or find a lender near you.
- 504: Provides up to $5.5 million to approved small businesses so they can invest in real estate, expand, or modernize. Find a lender near you.
- Microloan: Provides up to $50,000 to help with start-up and expansion costs. These loans come through mission-based lenders who also provide business counseling. Find a lender near you.
The SBA provides a number of different types of loans with different eligibility rules.
The 7(a) loan is the most common, and the most complex. Learn more about 7(a) loan types and eligibility.
In addition to the ones above, they also provide disaster loans of up to $2 million, specifically for businesses impacted by natural disasters or other emergencies.
Main Street Lending Program
The Main Street Lending Program is a new funding source from the Federal Reserve designed to allow banks to distribute loans more freely. For loans within this program, the Federal Reserve purchases 95% of the loan, with loan terms spanning 4 years and $0.5-25 million.
Note: These terms were changed by the Federal Reserve on April 30, 2020.
Main Street is open to businesses with fewer than 15,000 employees or revenue of less than $5 billion.
There are several requirements that must be met if you acquire a loan, including:
- All efforts must be made to maintain payroll and workers
- You must meet the restrictions that are stipulated in the CARES Act, specifically related to compensation, stock repurchase, and dividend restrictions
- There are limitations on the salaries of high earners for the duration of the loan and one additional year
Like the SBA loans, applying for a Main Street loan starts with an eligible bank. Contact your local lender to ask about applying.
As things evolve, we will continue to update this page with the latest federal loan programs and any changes to the ones listed above.