Businesses have faced significant challenges in 2020 due to the detrimental effects of COVID-19. Because of unprecedented shutdowns, small businesses have especially taken a hit with decreases in revenue.
With all the issues being faced, the U.S. Small Business Administration and many other organizations are offering various forms of economic relief. Usually it just involves a fairly quick application process.
The 6 dilemmas small businesses are facing during COVID-19
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Reductions in capital
Decreased revenue is creating serious challenges like meeting payroll, covering rent and vendor payments, and maintaining inventory.
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Interruptions in supply chain
The instability of international and domestic supply chains is forcing businesses to potentially modify and diversify their distributors and suppliers.
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Market demand changes
The demand for small business services and products has fluctuated as COVID-19 has made consumers fearful of going to brick and mortar businesses. People are also spending less money as unemployment numbers have soared.
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Accessibility problems
States have shut down a large portion of businesses that have been deemed “non-essential,” creating problems for many business owners in getting their products to consumers.
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Frequent cleaning/sanitation
Sanitation supplies have been difficult to find, making it a challenge for businesses to frequently sanitize after customers shuffle in and out of the building throughout the day.
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Shipping delays
Delays and elevated costs are making shipping processes more complex and difficult for maintaining inventory and shipping products out to customers.
How can small businesses deal with some of the problems they are facing from COVID-19?
Apply for SBA loan programs
7(a)
Loan amounts up to $5m can be lent to eligible small businesses to be used for:
- Inventory
- Operating capital
- Expansions, new construction, remodeling
- Equipment and inventory
- Startup costs
Express
Within just 36 hours, businesses who submit applications will be approved or denied for loans up to $350,000. The capital can be used in the same way as the 7(a) program.
Community Advantage
This pilot program uses mission-based lenders to offer loans up to $250,000 in underserved markets. Proceeds can be used in the same way as the 7(a) program.
504
This program is designed to foster job growth and retention. Proceeds from this loan can be used for the acquisition or refinance of fixed assets
Microloan
Loans up to $50,000 will be administered by non-profit lenders to businesses in underserved markets. The proceeds must be used for working capital, supplies, and equipment/machinery.
Funding Options
The SBA has also created various temporary programs to help small businesses during COVID-19:
Paycheck Protection Program
Provides businesses an incentive to keep all employees on the payroll by providing loan forgiveness for 7(a) program loans.
EIDL Loan Advance
This program offers a loan advance for up to $10,000 for businesses with less than 500 employees that are experiencing a loss of revenue from the pandemic
Express Bridge Loan Pilot Program
Allows businesses that have an established relationship with an SBA express lender the ability to promptly access up to a $25,000 loan.
SBA Debt Relief
The Small Business Administration will pay six months of loan-related costs like principle and interest for businesses that owe on certain loan programs.
State Programs
The Council for Community and Economic Research’s website has a helpful U.S. map that tracks current incentive programs offered by every state.
The map can be found here.
As an real estate professional, whether you have employees or work solo, COVID-19 is probably impacting your business in some way, Some of these programs may offer some much needed financial assistance temporarily until the economy improves.