Covid relief for SMEs in the US
COVID-19 ECONOMIC INJURY DISASTER LOAN
• Not restrictive in case of what the loan can be used for • Administered through SBA • Eligibility requirements are straightforward – not sector based / for certain industries alone • Company should fall within a Declared Disaster area in the US and most areas around the country are included • Any business with less than 500 employees can apply • Financial queries - past 12 months gross revenues (that is sales before any deductions are made); cost of good sold (direct costs) as of 31 Jan 2020, number of employees • Apart from this, most questions were relating to the business in general – how many years of trading, date of incorporation, details of owners, whether the company is owned by another corporation, etc • Declaration that the company or owners are not under inquiry for criminal offenses, perjury, fraud and the like • Loan-related question - Is the applicant or any listed owner currently suspended or debarred from contracting with the Federal government or receiving Federal grants or loans? • You can also choose an optionto be considered for an advance of US$ 10,000
Paycheck Protection Program (PPP)
Meant specifically to protect jobs
Loans have to be used for specific purposes of meeting specific costs "only" if it has to be waived off (forgiven)
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
This program is for any small business with less than 500 employees
SBA Express Bridge Loans
Can get up to US$ 25,000 if the company has a business relationship with an SBA Express Lender
Faster process
Will be repaid in full or in part by proceeds from the EIDL loan
No restriction of how a business can use this
The SBA Website explains it as – it’s meant to 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
SBA Debt Relief
Loans from third-party providers where the SBA will pay the principal, interest and fees of current 7a loans for a period up to 6 months
Also applicable for new 7a loans issued prior to Sep 27th, 2020
7a loans are specific to the COVID program, which will be disbursed through preferred lenders. Each lender may have some qualifying criteria
Types of 7a loans –
Standard 7a up to 5 million,
Small 7a up to 350,000,
SBA express up to 350,000 also with a faster turn around period that the Small loan. For the express loan SBA only guarantee up to 50% of the loan, for the small loan
SBA guarantees up to 75%
Export express – up to US$ 500,000
Export working capital – up to US$ 5 million
International trade - up to US$ 5 million also meant for export businesses that are suffering
