Businesses of all shapes and sizes have been disrupted in a major way due to an unprecedented virus. Unfortunately, small businesses have been hit especially hard.
Although some businesses have benefited from the recent small business coronavirus relief programs such as PPP loans and EIDLs, not all small businesses have been able to secure the benefits. If you’re a struggling small-business owner, then there are other options to consider, including a line of credit or merchant cash advance.
Today we’ll take a closer look at the non-SBA options that could provide financing relief for your small business.
Small Business COVID-19 Relief
In response to the crisis, the federal government passed the CARES Act to help the individuals and businesses get back on their feet. The effort to help keep businesses open included allocating funds to several kinds of COVID-19 relief financing. We will take a quick look at these two options below.
SBA Paycheck Protection Program (PPP)
The Paycheck Protection Program, also known as the PPP, is offering forgivable loans to small businesses. The goal of the program is to help small businesses stay open and continue to provide a paycheck to their employees.
Initially, $350 billion was allocated to this program through the CARES Act. Those funds quickly ran out, but Congress recently approved an additional $310 billion to continue funding PPP loans. If you have fewer than 500 employees, then it might be worthwhile to apply.
For a more detailed look at this program, check out our complete guide.
SBA Economic Injury Disaster Loan (EIDL)
The second small business loan option funded by the CARES Act is the Economic Injury Disaster Loan. Unfortunately, this funding option is not currently available for most small businesses. However, if you have an agricultural business that is struggling, then you can still apply on the Small Business Administration website.
Small Business Coronavirus Relief Options
Although both types of funding relief through the Small Business Administration are attractive, the funding is not unlimited. If you’re unable to secure relief through those loans, don’t panic. You’re not out of options. In fact, you still have several other viable financing options that could help you survive these difficult times.
State And Local Small Business Programs
There is no community in the country that has not been affected by the current economic conditions in some way. With that, many state and local governments are working to help their small-business owners keep their doors open.
The best way to find out if you qualify for a state program is to go to your state government’s website. You’ll likely see extensive information related to their response to COVID-19. Within that, you should be able to find more information about any small business Coronavirus relief programs that are being offered. If you qualify, then take the time to apply.
Beyond the help of your state government, many local municipalities are starting to add their own relief programs for their community. Check out your local Chamber of Commerce to find out more about any relief programs that you might qualify for. Many businesses have found that their Chamber of Commerce provides important information regarding small business COVID-19 relief financing.
Many companies, such as Facebook and Amazon, are providing grants for struggling small businesses. Although the requirements for private grants will vary dramatically, it is possible that your small business may qualify. Research any private grant options for your industry that could help you make ends meet.
Merchant Cash Advance
A merchant cash advance can be a good option if you need capital to run your business immediately. With a merchant cash advance, the financing company will purchase at a discount, your busineses future credit card and other receiveables. Payments are variable and based on daily receivables.
Line Of Credit
If you’d like more flexibility to solve your financing needs, then a line of credit can be a good solution. You’ll have the ability to borrow up to a certain amount, but you’ll only pay interest on the money that you actually borrow.
For example, let’s say you secure a line of credit for $50,000 but only borrow $20,000 to cover your financing needs. You would only need to repay $20,000 plus interest instead of $50,000 plus interest.
The beauty of a line of credit is that it will be there to fund your needs as necessary. The revolving nature of this type of credit will allow you to have quick access to funds whenever the need arises. Depending on your business, the line of credit may need to be secured by collateral, but it could remain unsecured in some cases.
Surviving The COVID-19 Crisis As A Small Business Owner
Right now, it is critical to be flexible as a small-business owner. The changing nature of the COVID-19 situation leaves many businesses vulnerable to long-term changes. Whether you need to pivot to an online revenue model or seek out a loan to fund your business operations, the actions you take could help your small business survive the coronavirus.
As we navigate these uncharted waters, please take advantage of the free resources offered by Rapid Finance. We’re here to help in these uncertain times.