March 17, 2020 | By: LendVer Staff –
These are confusing and unprecedented times. The coronavirus aka COVID-19, is spreading globally as governments attempt to stifle its progress through business and event closures, and social distancing. The stock market has had its largest single day drop ever, and businesses, large and small, are losing revenue at a staggering pace as people stay quarantined in their homes. What’s even more alarming is that access to capital is starting to constrict. LendVer has become aware of at least 3 nationwide business lenders (not any listed on lendver.com) that have ceased lending, or significantly modified their credit guidelines until this crisis abates.
What’s Being Done to Help Businesses?
On March 12th, 2020, Jovita Carranza, the SBA Administrator, announced that the SBA will provide up to $2 million in disaster assistance loans to small businesses affected by COVID-19. The governor of an affected state must make a formal request to the SBA for assistance, then the SBA will make an Economic Injury Disaster Loan declaration which will make disaster assistance loans available to the affected region. The loan application process will then be coordinated with the SBA through the governor’s office, and loans will be made available for fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. The interest rate on loans up to $2 million for for-profit businesses will be 3.75%, and the interest rate will be 2.75% for non-profit businesses.
Why the SBA’s Disaster Relief Loan Program is Flawed
The problems with the plan laid out by the SBA to provide disaster assistance loans are myriad. For starters, as of the date of this article, no governor of any state has made a request for these disaster assistance loans, so no business owner is yet able to access them. Additionally, since no state’s governor’s office has made a request for disaster assistance loans, what the application process is and what it entails is unknown. Also, no governor’s office is structured or experienced in facilitating loan applications, which could further complicate and delay funding to small businesses. The largest flaw in this plan is that only businesses without access to credit elsewhere are eligible for the SBA’s disaster assistance loans. Who at the SBA or the governor’s office determines that a business can’t obtain financing elsewhere? Is a business that is only able to obtain a merchant cash advance or alternative business loan with a 100% APR, going to be excluded from the SBA’s disaster assistance financing? Unfortunately, the SBA’s announcement of its plan to provide disaster relief loans has resulted in more questions than answers, and has only caused confusion and angst among small business owners.
Where Can Businesses Obtain Funding Now?
(The below lender list has been updated as of September 29, 2020)
If you would like to signup to secure your spot for the next round of PPP loans, and have access to an easy, automated application process, then the below PPP lender is an excellent option (the PPP expired on August 8, 2020 and further legislation will hopefully be approved to extend the program) .
The Loan Source is one of only 14 non-bank lenders approved by the Small Business Administration (SBA) to provide SBA loans, and has opened its PPP loan waitlist in anticipation of Congress approving an extension to the program. The Loan Source is part of the selective SBA Preferred Lender Program, which is the highest level of approval status that a lender can receive from the SBA. This status enables a lender to directly approve SBA loans, without having to wait for SBA sign-off. The Loan Source was one of the leaders during the first rounds of the Paycheck Protection Program, originating over 5,000 PPP loans totaling in excess of $500 million. Since The Loan Source is not a bank, it does not require an existing relationship, or that you open up an account or transfer funds or other business services to receive a PPP loan. Those businesses interested in applying for a first or second PPP loan once Congress approves an extension to the PPP program, should contact The Loan Source.
These are nerve racking times, as the future of our personal health and financial well-being is called into question. It’s important to remember that preparedness, and not panic, is the best option when dealing with a crisis. To stay well and prevent the spread of COVID-19, it’s important to follow safety guidelines (such as properly washing your hands) issued by the CDC and The White House. What’s also important is to protect the health of your business, by putting the necessary working capital in place now, while you still have the opportunity to do so.
Don’t hesitate to contact us if you are unsure of which financing option is the right choice for you, or if you need additional lender recommendations beyond those mentioned in this article.