How to Use Federal Relief to Stabilize Your Business

Colorado Business

The COVID–19 pandemic has had an unprecedented impact on the US economy, with a particularly harsh effect on small to mid-sized businesses. This week the US Department of Labor announced that jobless claims rose to 6.6 million people. Many small businesses are struggling to stabilize their business and keep afloat during this crisis. This article is intended to help small businesses stay vital during the pandemic, and then re-launch when the time is right. 

Relief Programs and Loans Can Help

For many businesses, the best source of funding and debt relief will be the federal Small Business Administration. The CARES Act, enacted on March 27, 2020, includes $376 billion in relief for businesses and their employees, much of which will be disbursed through the SBA, the US Department of Agriculture, and other federal agencies.

Economic Injury Disaster Loan (EIDL) and EIDL Emergency Advances

  • Form: https://covid19relief.sba.gov/#/
  • Who It Helps: businesses with less than 500 employees, sole proprietorships, independent contractors, Employee Stock Option Programs with less than 500 covered employees, tribal small business concerns, cooperatives with less than 500 employees, 501(c)(3) non-profits, and aquaculture enterprises, nurseries, or agricultural cooperatives (but not other private agricultural enterprises).
  • Note: Due to the large number of entities applying for relief under this program, Nicia Crosson of the Trinidad-Las Animas Chamber of Commerce recommends that businesses apply for this program either late at night or early in the morning.

The SBA is offering a COVID–19 Economic Injury Disaster Loan Emergency Advance that will advance up to $10,000 to businesses experiencing difficulties during the pandemic. Businesses need to ensure that they are eligible for this relief. Businesses can apply for this program on the SBA website.

If a business requires more than the $10,000 offered through the Emergency Advance (see above), they can seek out an Express Bridge Loan from the SBA to access up to $25,000. This Express Bridge Loan acts as emergency financing while small businesses seek out long-term financing through the SBA’s traditional community advantage and microlending programs.

Paycheck Protection Program

  • Form: https://bit.ly/3aW1DrO
  • Who It Helps: Solo proprietorships, independant contractors, businesses in the food and accommodation industry with less than 500 employees at any given location, any business or 501(c)(3) non-profit with more than 500 employees or the SBA industry standard number of employees, or any other enterprise that meets SBA size and industry standards.
  • Note: Businesses should apply for this program through local lenders.

For those businesses struggling to keep their employees on their payroll, the SBA offers the Paycheck Protection Program, which provides forgivable loans to businesses if all employees are kept on the payroll for eight weeks, and the loan is used to pay for payroll, rent or mortgage payments, or utilities.

SBA 7(a) Program Loan Debt Relief

  • Form: https://bit.ly/2RgYv1J
  • Who It Helps: Businesses that already have loans under the SBA 7(a) program, Section 504 loan program, or SBA microloans, or that obtain new loans under these programs prior to September 27, 2020.  
  • Note: The SBA’s debt relief for these program loans should be automatic, but if that does not occur, borrowers should contact the SBA at one of two regional service centers, 
    • Birmingham Disaster Loan Servicing Center
      • Phone: 800-736-6048
      • Email: BirminghamDLSC@sba.gov
    • El Paso Disaster Loan Servicing Center:
      • Phone: 800-487-6019
      • Email: ElPasoDLSC@sba.gov

For those businesses that already have SBA loans, such as the SBA 7(a) program loans, the SBA is providing debt relief in the form of paying the principal, interest, and fees of current 7(a) loans for six months and new loans issued before September 27, 2020.

Farm Service Agency Relief

Businesses operating in the agricultural sector can utilize loans, crop insurance, and grants offered by the US Department of Agriculture’s Farm Service Agency. The FSA has relaxed many of the requirements associated with seeking a Farm Loan and has also offered to consider payment deferral requests and temporary forbearance of liquidation and foreclosure actions for those in default on farm loans.

This list of programs designed to help small businesses is not exhaustive. Please do not consider this article to be legal or financial advice.