During their inception, SBA Covid-19 relief loans were seen as the perfect tool to survive this unusual pandemic. But many business owners are coming to terms with the harsh reality as applications get rejected and loan terms get clearer.

The CARES Act provided Coronavirus Relief Funding through two programs; the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL).

With possible federal loan forgiveness, the two funding programs seemed like the perfect deal until business owners realized that their terms can be unforgiving.

For instance, small businesses have reported difficulties getting access to PPP loans. And those who are lucky to get a lump sum have 8 weeks to spend 75 percent on payroll-related expenses or face repayment (instead of forgiveness).

So where do you search for business funding if you’ve been rejected, or source the extra funding to clear other expenses.

SBA COVID-19 Relief Loans: What They Cover

PPP loans were passed for two main reasons; (1) to give microbusinesses the finances they need to live through the COVID-19 lockdown (approximated to last 2 months). (2) To help businesses retain employees and control job losses.

75 percent of the amount from these business loans must cover up to 8 weeks of payroll. The rest can be spent on utilities, rent and other fixed costs. Failure to achieve the payroll specifications denies you loan forgiveness.

The following businesses qualify for PPP loans; Sole Proprietorships, Nonprofit firms, Veterans Organizations, Tribal business concerns, Self-employed persons and Independent Contractors.

Similarly, EIDL funds were created to help settle payroll and fixed costs like rent, utilities and long-standing debt settlements. Only, this product was meant for self-employed persons.

What They Do Not Cover

These two programs were built to assist retailers with most of their fixed expenses, but not any other business costs they’d like to settle, even amid low revenue.

SBA relief loans, therefore DO NOT cover stuff like;

  • Inventory
  • Property maintenance or repairs.
  • Expansion projects
  • Maintaining Cash flow

So what do you do when you need funding to finance these equally important business operations?

Other Sources of Business Funding

SBA relief loans aside, you have a long list of options when it comes to funding a small business. Try the following options when searching for extra money to survive COVID-19.

Type of Funding

How to Use it

Merchant cash advance

Maintain cash flow and purchase inventory.

Business credit cards

Purchase office materials and settle minor expenses

Pals & Siblings

Expand your company; purchase tools that will streamline business processes

Business lines of credit

Fund your new marketing campaign

Personal Savings

Sort out personal business costs

Invoice financing

Distribute profits and invest back in your company

Final Words

All these products existed even before the dawn of COVID-19. Business owners should first understand the critical role of each product, its terms and conditions and the best place to source it before sending a loan request.

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