A Covid-19 relief loan for Services industries hopes to alleviate the effects of the pandemic.
Due to the Covid-19 outbreak, many businesses are keeping a skeleton crew to keep operations going while other businesses have halted their operations entirely.
Very few industries have been spared from the catastrophic, economic damage that this pandemic has caused. One of the hardest hit of all industries is the service industry.
As a result of stringent social distancing regulations by the local and federal government, the service industry businesses that have suffered a massive blow include restaurants, computer services, accounting services, tourism, and the trades, just to name a few. All of these small businesses are built on dealing with their customers in person and with much contact. Unfortunately, the pandemic has eradicated these business models completely.
The CARES Act Endeavors To Help Small Businesses
Thanks to the CARES Act signed into law by President Trump, a hefty $376 billion was made available to grant economic relief to both U.S. workers and small businesses. Here are just some resources created:
Emergency Disaster Assistance Fund
The Small Business Administration or (SBA), created an Emergency Disaster Assistance Fund that offers loans at a lower interest for those businesses affected by the crisis. It provides loans for up to $2 million. Interest rates are 2.75 percent for nonprofits to close to 3.75 percent for for-profit establishments.
These loans are being offered with long-term repayment plans in order to maintain payments as inexpensive as possible. They offer a term of up to 30 years. Specific term conditions will be decided based on the borrower’s capacity to repay. To apply for this loan, there is no cost, applying for the loan will not tamper with your credit, and once qualified, businesses are not obligated to accept the loans.
Paycheck Protection Program
The newest SBA resource added by the CARES Act is the Paycheck Protection Program. The program broadens the guidelines for the current SBA 7a loan and includes loan amounts of up to $10 million. It also includes a relaxation on the restrictions of revenue. Although there are some exceptions, companies are eligible if they have up to 500 employees.
There are limitations on how these funds can be used. Loans should be used to pay the costs for payroll, health insurance premiums, rent, mortgage interest, utilities, and other necessary costs for doing business.
Express Bridge Loan Pilot Program
For small businesses that have an existing relationship with an SBA Express Lender, they have the ability to obtain up to $25,000, fast. These loans can provide critical economic relief for the temporary loss of earnings. They can be used as term loans or as a supplement as they seek more funding by applying to an SBA Economic Injury Disaster Loan. If a business is really hurting for funds as they wait for the Economic Injury Disaster Loan, they might be able to qualify for the Express Bridge Loan Pilot Program.
Help Is At Hand
Things may look bleak for many within the service industry, however, the availability of funding means that small businesses may not need to shut down their operations permanently.
The federal programs mentioned above will provide the necessary financial support small businesses within the service industry need to weather the storms caused by the health crisis.