According to President Trump, SBA will help struggling businesses to get out of their current financial predicaments as the government works to restore operations within the country. The business stimulus package currently under negotiation will increase SBA’s lending power that will help the economy and livelihoods of many people as the current crisis keep worsening. Although the details are still being articulated, the SBA in collaboration with governors will work to provide both small businesses and targeted nonprofits that have been worst hit by the pandemic with low-interest loans. Historically, this agency has issued loans during emergency situations, mainly natural disasters to the affected entities that are unable to secure emergency funding elsewhere and have nowhere else to run to after their businesses are impacted by a disaster.
For many years, SBA has played a crucial role in helping business during different disasters. It has rescued businesses from large scale disasters such as hurricanes before by disbursing funds that help them remain in operation. However, a pandemic with far-reaching impacts such as the novel coronavirus is redefining many things. It is testing the available policies beyond the limit. Despite its usefulness in helping businesses struck by disasters, SBA has faced budget cuts over the recent years. However, the coronavirus has shown the importance of this kitty to small businesses and nonprofits that cannot access financing from many financial institutions.
Small businesses can get up to $2 million low-interest loans from this kitty. The organizations such as small businesses, agricultural cooperatives and nonprofits, among others qualify for these loans during this time. The processing of the loan decision may take between two and three weeks while the payment of the loan will have a one-year deferment with an interest rate being 3.75% for small businesses and 2.75% for nonprofits. The aim of this deferment is to allow businesses to recover from the crisis.
The SBA loans can help small businesses to pay things such as fixed debts, monthly bills, payroll, and accounts payable among other things that they are unable to pay due to the hard-hitting impacts of the coronavirus pandemic. In order for them to receive these funding, applicants are required to give out information such as their recent federal tax return, their tax information, and a recent annual profit and loss statement as well as a balance sheet. While not everyone can access the loans, those whose application will be rejected are called after the decision has been made. They are informed of the reason for denial and what they need to do in the future if they may want to begin a new application process. This puts them in a position where they can come back with a new application and succeed.