The coronavirus pandemic is wreaking havoc with businesses of every size and type. If yours is one of them and you're struggling to meet your obligations, you might be eligible for a loan through the Small Business Administration (SBA) or other organization.
Here's what you need to know.
Basic Application Requirements Still Apply
In a recent blog on coronavirus preparedness, our colleague Andy Hale mentioned the new low-interest SBA loans that have become available. These Economic Injury Disaster Loans, which the SBA is offering in conjunction with state governors, can provide distressed businesses up to $2 million in working capital.
Although the SBA is expediting assistance through a streamlined three-step application process, you'll still need to provide some basic financial information, including:
The specific amount you'll need: You can't just apply for an open-ended loan. You need to request the amount necessary to get through a defined period of time based on where current sales are compared to projections and versus fixed costs such as rent, utilities and wages.
Note: Be sure to take into account the Families First Coronavirus Response Act, which requires employers to offer up to 80 hours of paid sick leave, among other stipulations. Also, bear in mind that any key employees you lay off might seek employment elsewhere and be unavailable for rehire when the crisis passes. Try to retain them if at all possible.
Complete, up-to-date financial records: My colleagues at Supporting Strategies have given valuable guidance for acquiring business loans, including this overview of the process and a detailed summary of all the documents you may need to secure an SBA loan. Briefly, these documents include:
- Monthly sales for 2017, 2018 and 2019 as well as January and February 2020
- An optional profit-and-loss (P&L) forecast for the period affected by the disaster until normal operations resume
- Balance sheets for 2017, 2018 and 2019
- P&L statements for 2017, 2018 and 2019
In addition, if you haven't yet filed your 2019 taxes, you'll need to provide business and personal taxes for 2017 and 2018.
Explore All Your Options
With the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, small businesses have another potential avenue for financial assistance, though the details of how to implement the bill are still being worked out. You can get a basic overview of the CARES Act here as you consider all your options during what's likely to remain a fluid situation throughout 2020.
Keep in mind that while the SBA has geared up an emergency response to the coronavirus pandemic, the sheer volume of requests has been overwhelming. (If possible, access the SBA site during non-peak hours, from 7 p.m. to 7 a.m. ET.) You might be able to receive assistance navigating the process through a local organization such as the Women's Business Development Center here in the Chicagoland area.
Finally, during this unprecedented crisis, an outsourced bookkeeping services provider can offer the financial insight you need to determine exactly where your business stands — and the size of the loan you'll need to help ensure your business' survival.