Guiding You to the Appropriate Agency Program
The resulting COVID-19 pandemic has placed a substantial economic burden on businesses across the country. Through the Small Business Administration (SBA), the Federal Government is offering financial assistance to businesses to meet their obligations during this economic crisis with SBA 7(a) Loan Program currently proposed to be amended under the Coronavirus Aid, Relief and Economic Security (CARES) Act, and the SBA 7(b) Economic Injury Disaster Loan (EIDL) program.
Each of these distinctive programs may not be available to all small businesses and include different loan processes, provisions, and terms. For businesses that qualify to apply to either program, funds may not be received for the same purposes. Additional details regarding each program are included below for small business owners to evaluate their potential eligibility and gather more information.
Loans Under Paycheck Protection Program (Pending Finalization of CARES Act)
- The current draft of the CARES Act authorizes the SBA is authorized to guarantee up to $10 million in SBA 7(a) loans to businesses with not more than 500 employees or the applicable size standard established by the SBA for the industry in which the business operates, if greater.
- The loan period for this program started on February 15, 2020, and was to end on December 31, 2020, but the Consolidated Appropriation Act extended the Loans.
- Under certain circumstances, a portion of this loan may be forgiven.
- The applicant applies for this loan with an SBA Approved Lender.
Loans Under EIDL Program
- SBA’s Economic Injury Disaster Loan (EIDL) program provides small businesses with SBA 7(b) working capital loans of up to $2 million
- Applicants must be able to prove economic injury to qualify for this loan.
- The applicant applies on-line for this loan directly with the SBA through the SBA website.
Shuttered Venue Operators (SVO) Grant
The Shuttered Venue Operators (SVO) Grant program
was established by the Economic Aid to Hard-Hit Small Businesses, Non-profits, and Venues Act, signed into law on December 27, 2020. The program includes $15 billion in grants to shuttered venues, to be administered by the Small Business Administration's Office of Disaster Assistance.
Eligible applicants may qualify for SVO Grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. $2 billion is reserved for eligible applications with up to 50 full-time employees.Eligible entities include:
- Live venue operators or promoters
- Theatrical producers
- Live performing arts organization operators.
- Relevant museum operators, zoos, and aquariums who meet specific criteria
- Motion picture theater operators
- Talent representatives
Express Bridge Loan Pilot ProgramExpress Bridge Loan Pilot Program
allows small businesses that currently have a business relationship with an SBA Express Lender to quickly access up to $25,000. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loan or used to bridge the gap while applying for a direct SBA Economic Injury Disaster Loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.Terms & Conditions for Express Bridge Loan-
- A Maximum loan of up to $25,000
- Fast turnaround and approval.
- Will be repaid in full or in part by proceeds from the EIDL loan.
SBA Debt Relief -7(a), 504, and Microloans
Initial Debt Relief Assistance
As a part of the CARES Act, SBA is authorized to pay 6 months of principal, interest, and any associated fees that borrowers owe for all 7(a), 504, and Microloans reported in regular servicing status (excluding PPP loans). This debt relief to borrowers was originally dependent on the loan being fully disbursed before September 27, 2020, and does not apply to loans made under the Economic Injury Disaster Loan (EIDL) program.
These original provisions were amended on December 27, 2020, through the Economic Aid to Hard-Hit Small Businesses, Non-Profits, and Venues Act (Economic Aid Act). The Economic Aid Act revised the eligibility criteria for assistance to include all 7(a), 504, and Microloans approved up to September 27, 2020, even if not fully disbursed. All other provisions for initial debt relief remained the same.
Borrowers need not apply for this assistance. SBA provides this assistance automatically as provided below:
- For loans not on deferment, SBA will make monthly payments based on the next payment due on eligible loans for a total amount equivalent to no more than 6 months of installment payments.
- For loans currently on deferment, SBA will begin making monthly payments with the first payment due after the deferment period ends for a total amount equivalent to no more than 6 months of installment payments.
SBA has notified 7(a), 504, and Microloan Lenders that it will pay these borrower loan payments. Lenders are to report to SBA periodically on the amounts due once a loan is fully disbursed. Payments collected after March 27, 2020 may be applied to the outstanding loan balance or returned to the borrower at the borrower’s discretion.
Additional Debt Relief Assistance
The Economic Aid Act also authorized additional debt relief payments to 7(a), 504, and Microloan borrowers beyond the 6-month period prescribed in the CARES Act. The level of assistance varies based on when the loan was approved and will begin on or after February 1, 2021.
Restaurant Revitalization Grants
The restaurant Revitalization Grants program established under the ARP Act provides $28.6 billion to eligible businesses. SBA is instructed to prioritize small businesses owned by women, socially and economically disadvantaged, and veterans in the initial 21-days of the RRG program. $5 million is marked for those eligible businesses whose gross receipt for the year 2019 was $500,000 or less.
The below-mentioned entities are eligible for the Restaurant Revitalization Grants:
- bars, lounges, and taverns;
- food stands, carts and trucks;
- tasting rooms and taprooms;
- other licensed facilities or premises of alcoholic beverage producer where the people can taste, sample, and purchase alcoholic beverage products; and
- Other places of business in which the public assemble for the serving food or drink.
State Small Business Credit Initiative (SSBCI)
The American Rescue Plan restored the funding for State Small Business Credit Initiative, with $10 Billion in grants for the following –
- $1.5 Billion in grants to states which will support businesses owned and operated by socially and economically disadvantaged people.
- $1 Billion for incentive program for states which support above mentioned businesses.
- $500 million dedicated to small businesses with less than 10 employees.
- An additional option of $500 million for states to provide accounting, financial and legal advisory services