How to Get a Small Business Coronavirus Loan or Grant
Dylan Telerski / 7 May 2020 / Business
While supermarkets, pharmacies, and streaming services are thriving, the reality on Main Street is very different. Small business owners are used to operating under tight margins–as long as they are allowed to remain open and bring in revenue.
The federal government understands that small businesses are the lifeblood of America, which is why both Democrats and Republicans worked together to pass the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Federal and state aid have lowered barriers to obtaining funding to ensure that more businesses have the opportunity to survive the crisis. They may apply for a PPP loan, EIDL loan, and EIDL grant under the program. The EIDL may be rolled over into a PPP if approved, allowing you the ability to potentially forgive some of the debt and decrease the interest rate to 1%.
Keep reading to learn how to apply for small business relief.
How to get a small business coronavirus loan or grant
Find out if you qualify for a Paycheck Protection Program loan through the U.S. Treasury Department.
- Your business should have 500 or fewer employees, though there may be a few exceptions.
- Sole proprietorships, independent contractors, and self-employed individuals may apply.
- You need not try to get funding elsewhere before applying to the program.
- Businesses in food or hospitality industries may be eligible, depending on their location.
- Your business must have been established as of February 15, 2020.
- To have your loan forgiven, you must use the PPP loan for payroll expenses, rent, and utilities.
Find out if you qualify for an Economic Injury Disaster Loan or grant through the U.S. SBA.
- Your small, cooperative, private nonprofit, agricultural, or tribal business has under 500 employees.
- Sole proprietorships, independent contractors, and the self-employed may qualify.
- Your business must have been established by January 31, 2020.
- Your business was directly affected by coronavirus in some way.
- Applicants are judged based on their credit history and ability to repay.
- A personal credit check is required for owners with a 20% or greater stake in the company.
Collect your required documents.
- For PPP loans, businesses will need to submit: A front/back color copy of a valid driver’s license for each owner; 941 quarterly tax filings (2019, 2020 Q1), 944 annual tax filings (2019), payroll register for the past 12 months, and 12 months of most recent bank statements. Contractors or self-employed individuals need: IRS 1040 Schedule C, 1099s (2019), income and expense reports (2019), and any other document proving payroll expenses.
- For EIDL, all business owners with a 20% or more stake in the company must submit: loan applications, tax information authorization (IRS Form 4506-T), federal income tax returns, personal financial statement (SBA Form 413), and a schedule of liabilities listing all fixed debts.
Submit your paperwork.
- Download and fill out the PPP loan form. Submit to a credit union or other SBA-approved lender.
- Apply for EIDL through the SBA Disaster Portal.
- For EIDL, be sure you have checked the box indicating you wish to be considered for the $10K grant.
- You will receive PPP loan funding within 10 days of approval. You can check the status via Lendio.
- It can take 21 days or more for EIDL approval, but you may get your $10K cash advance in 3 days.
How to get money for your small business when loan and grant money runs out
The process of trying to get a small business coronavirus loan or grant is not easy. Even though the lending requirements and documentation have been considerably reduced, thousands of businesses are also applying for that finite pool of money.
If you are worried about how your small business might survive the COVID-19 crisis, consider speaking to a financial advisor. Together you can strategize about how your current resources can be most effectively used during this downtime.
The government’s coronavirus economic support package also includes business interruption insurance, paid sick leave, a tax deadline extension, and favorable 401(k) loan terms as other options to make your money stretch.
Contact Ubiquity if you have questions about your small business 401(k) plan and how making changes to your company’s retirement plan can free up capital.