April 14, 2020 | Last Updated on: January 17, 2024
DISCLAIMER: This article was written in 2020 and has not been updated. For more up to date information about small business funding products and options, please browse our recent articles.
Looking for funding assistance amid the current health crisis? We’ll show you some of the best Small Business Grants in 2022. Get in-depth insights on the best small business grants in 2022 started in response to the COVID 19 to help the highly affected small business groups in the United States to get access to adequate funds. Also, you should understand the difference between a grant and a loan. Simply, a grant is free money and does not need to be paid back. A loan requires that you pay the lender back with interest.
More and more federal and state-lending support programs are put in place to support small businesses in the US to tackle the current pandemic situation with help of the grants and funding relief programs. Watch out this space for more comprehensive information about all the funding resources available to small businesses during this crisis.
Small businesses have been the worst hit by the mandatory state lock-down orders and cash flow problems in operating their business brought upon by the spread of the coronavirus (COVID-19). However, small business owners can find some relief by turning their attention to the relief programs and funding assistance programs being instituted in response to the current health crisis. The U.S. Small Business Administration (SBA) along with other small business development centers and financial institutions are providing services to help entrepreneurs and businesses with disaster loan program applications, physical and economic loss estimations, financial business preparedness and also long-term planning. Important provisions have been made for small businesses in the stimulus package enacted by Congress. The Federal Deposit Insurance Corporation (FDIC) has established measures to encourage traditional funding agents such as banks and federal agents to proactively work with businesses in need of coronavirus-related funding assistance, both in terms of personal and business finances.
Below you can find a list of COVID-19 small business grants, financial assistance relief fund programs and federal as well as state-specific relief resources that may be available to help you and your business sail through these tough times. Understand your small business loan needs and make informed choice of the government financial relief programs. However, keep in mind some important factors before you decide to go for these COVID-19 relief programs.
The $2 trillion stimulus bill passed by Congress includes several programs, cash grants and initiatives in the Corona virus Aid, Relief, and Economic Security (CARES) Act designed to assist business owners with their financial needs, as well as some additional tax provisions that are outside the scope of SBA to promote their economic development. Here is a list of the programs aimed at assisting the small business community:
Paycheck Protection Program Loans: Under this program, small businesses maintaining payroll during this crisis would be provided cash-flow assistance through 100% federally guaranteed loans. The loans would be forgiven for employers who keep all their workers on the payroll for eight weeks and the loan amount is used for payroll costs, rent, mortgage interest, or utilities. Eligible businesses can get loan payments deferred for six months and there would be no collateral or personal guarantees required by the lender. This program is expected to help small businesses and economy rebound quickly after the crisis, and is also expected to prevent any layoffs. Businesses could apply through any existing SBA 7(a) lender or any other credit unions. A loan fund under this program would be available through June 30, 2020. Any small business with less than 500 employees could put forward their loan application.
Small Business Debt Relief Program: This program is intended to provide immediate relief to small businesses with non-disaster SBA loans and microloans. Under it, the loan payments of borrowers will be covered by the SBA on these loans, including the principal loan amount, interest and fees for 6 months. New borrowers taking out loans within six months of the President signing the bill into law can also benefit from this relief.
Economic Injury Disaster Loans: The SBA is extending working capital loans of up to $2 million to small businesses and nonprofit organizations affected by the coronavirus as part of the Economic Injury Disaster Loans (EIDL) program. Small businesses need to pay an interest rate of 3.75% for such loans, and for nonprofits, the interest rate stands at 2.75%. Businesses including sole proprietors and having fewer than 500 employees can qualify for the loan. Under this program, applicants do not need to provide a personal guarantee and loan payments could also be deferred for up to four years.
Emergency Economic Injury Grants: An emergency grant of $10,000 will be provided to small businesses and non-profits that have suffered because of the COVID 19 within three days of applying for the SBA Economic Injury Disaster Loan (EIDL). Even for businesses that are denied the loan could still qualify for the grant. The emergency loan money can be used to maintain payroll, pay employees when on sick leave and also meet other needs such as rent or production costs caused by supply chain disruptions.
Counseling & Training Guidance: Small businesses in need of a counselor to sail through such tough times can take the help of local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These associations will provide additional short-term loans to reach out to more and more small business owners and also support them with proper counseling and updated information regarding the coronavirus spread. Small businesses can also visit https://www.sba.gov/ to find a local resource partner.
SBA Express Bridge Loans: As part of this program, small businesses with an already existing business relationship with an SBA Express Lender are allowed to get up to $25,000 with hassle-free documentation and less paperwork. This loan relief is intended to extend the economic support to the small business group to help them tide over the loss of revenue brought on by the pandemic. These can be either term loans or the loans can be used to meet the immediate cash requirements or bridge the gap while applying for a direct SBA Economic Injury Disaster Loan. Businesses in need of immediate cash while waiting for the approval of loan disbursement on Economic Injury Disaster Loan may qualify for an SBA Express Disaster Bridge Loan. These loans have a fast turnaround time and can be repaid in full or in part by proceeds from the EIDL loan.
The Internal Revenue Service (IRS) has extended the date for federal tax return filing deadline for both individuals and businesses to July 15, 2022. Hence, the tax payments for 2022, which was previously to be made by April 15 will now be due on July 15. Also, few state taxes can be paid later. Many states have aligned their state tax payment deadlines with that of the new federal tax filing deadline. Reduced late tax payment penalties or waiver on certain state taxes could also be introduced due to coronavirus.
Unemployment benefits: The CARES Act signed into law by President Trump on March 27, 2020, provides the states with the choice to give unemployment insurance and compensation benefits to independent contractors and other workers that are ineligible for securing unemployment benefits.
States and municipalities across the US are initiating and adding to the existing list of relief and funding programs to provide support to the small business sector. Find out about the SBA disaster assistance programs, new relief measures and grants available in your area from state authorities on the governor’s website for up-to-date information. The National Governors Association provides a list of governors’ websites and the following are some of the funding programs that have been designed to aid the small business growth during the pandemic.
The unprecedented coronavirus crisis has led many federal and state agencies to adopt necessary measures to support businesses virtually and through webinars and online consultations. However, businesses need to take into account certain factors before going in for the above grants and loan relief programs. Assess your business situation and analyze your financial standing now as compared to the same time last year. Figuring out the cash flow will help you see if you are facing a severe cash crunch. Also, examine your balance sheet and assess your revenue and expenses incurred last year, ones made till March this year and analyze if there have been additional cost burden that is taking a toll on your company’s wealth. Once you analyze your position since the COVID crisis and its impact on your projected sales and revenues, decide on the specific type of financial relief program you need to maintain your operational costs and survive during these tough times. Refer to the guide created by the U.S. Chamber of Commerce to help small businesses and self-employed individuals and accordingly prepare to file for a loan application.
The US government has done its part to make funds available to the business lending community, which in turn can provide the much-needed cash into the hands of small business owners during this unprecedented time. The mounting challenges during this period may make the whole process of getting cash slow and stressful but the small business community in the country needs to know that ample measures and additional resources have been put in place to put them and the economy get back on its feet quickly.
