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What Funding Options Do Small Businesses Have During Covid-19?


Covid-19 has wrought havoc on the world economy and the economic impact has been widespread. The virus has been just as ruthless and indiscriminate as it has been with people when it comes to damaging businesses. Fortunately, there are funding options available.


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Small Business Administration (SBA)

Most of the government assistance for small and medium-sized enterprises will go through the SBA. There are currently three packages available; the Paycheck Protection Program (PPP), EIDL loans, and SBA Express Bridge Loans. There may be more programs added in the future, or the existing program could be amended.

Unfortunately, not every business will qualify for assistance via the SBA. There will also be businesses that find the SBA’s help inadequate to keep their business afloat. Let’s take a look at those three options in more detail, and what alternatives exist to fund small businesses through the covid-19 crisis.

Paycheck Protection Program

As things currently stand, the Paycheck Protection Program will expire on August 8th, 2020. Businesses have until midnight on this day to apply for the program. Applications can be made from a range of participating lenders.

To qualify, businesses must have fewer than 500 employees. For food services such as restaurants and hotels, this means fewer than 500 employees per location. Tribal businesses are also eligible for funds, as are franchises that are owned independently. There are some provisions for workers who are self-employed. Provisions added at the beginning of April made PPP available to independent contractors, gig workers, and other forms of self-employed workers.

Economic Injury Disaster Loan

For small business owners and businesses within the agricultural sector, additional funding has been made available in the form of a low-interest EIDL. Agricultural businesses with fewer than 500 employees are now able to apply, the list of agricultural businesses encompasses more than just commercial farms and also encompasses ranching and the production of “food and fiber”.

SBA Express Bridge Loan

Any business that has already applied for assistance through an SBA Express Lender can access up to $25,000 in the form of a bridging loan. These are designed to tide businesses over until their revenue picks up again and they bridge the gap while waiting for an EIDL application to process.

Upon receipt of EIDL funds, the appropriate amount is deducted to recover the loan, either in full or in part. In the simplest terms, it’s like getting a $25,000 advance on your loan.

Other Assistance

Businesses who don’t qualify for the above options, or who need to secure additional funding beyond what the government provides at a future date, can often take advantage of good loan rates in the current climate. There are lots of borrowers seeking business loans right now, so healthy businesses stand out. If you are confident that your business will rise again soon and you can convince a lender, you might want to use private-sector borrowing to secure the funds that you need as quickly as possible.

These are the main options that small businesses currently have if they want to supplement their current revenue. Of course, some businesses will need even more help, while others will be able to adapt with ease. All we can say is, good luck out there!

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