Several types of emergency financing are available for general business needs or specifically dedicated to businesses affected by COVID-19. Here are some options ranging from government assistance to private financing.
SBA disaster loans
The U.S. Small Business Administration (SBA) opened its Economic Injury Disaster Loan Program to businesses affected by the coronavirus. The program is now open to all states and U.S. territories, including Guam, Puerto Rico, U.S. Virgin Islands and American Samoa.
Small businesses and nonprofits severely affected by COVID-19 can visit the SBA website to apply for low-interest working capital loans up to $2 million.
• Check the SBA’s COVID-19 assistance page for updated resources and guidance.
• Keep track of areas that become eligible for SBA disaster assistance.
Economic Injury Disaster Loans, or EIDLs, are reserved for business owners, homeowners and renters in areas where a state-declared disaster has occurred. They are different from physical disaster loans available after storms or other natural disasters. EIDLs have repayment terms up to 30 years and a maximum 4% interest rate.
• Learn more about SBA disaster loans
Do I qualify for expanded SBA financing?
To be eligible, your business must be located in one of the states designated to receive funding due to COVID-19. You also must meet the SBA’s general requirements, which include being a ”small” business based on average annual receipts or average number of employees as well as:
• Not receiving funds from any other lender, and
• Being able to repay debt based on projected cash flow.
The SBA typically reviews disaster loan applications within four weeks, and it would take five days after signing loan closing documents to receive funds. Keep this timeline — which may be longer or shorter depending on your circumstances — in mind when applying for funds
• Continue reading about how to get an SBA loan
The Federal Reserve announced it would establish a Primary Dealer Credit Facility to help banks and the broader financial system secure funds to provide credit to struggling businesses. Details are forthcoming, but essentially, the program provides large financial firms or primary dealers with collateral in exchange for opening up sources of funding to small businesses. A similar program was used during the 2008 financial crisis.
• Read more about the Fed’s response to COVID-19
Online business loans
As opposed to government-backed or even bank loans, online business lenders, on the other hand, typically offer fast approval, fewer credit restrictions and may even provide same-day funding. Short-term or long-term business loans are available from online lenders. Short-term loans must be repaid in three to 18 months and generally have higher interest rates than long-terms loans, which could be repaid in three to 10 years. Business owners can apply for financing directly through an online lender’s website.
• Take a look at our top picks for online business loans
Other emergency financing:
In addition to loans, you could apply for several types of business financing with fast turnaround times:
• Merchant cash advances
• Invoice factoring
• Business line of credit
These options, also from online business lenders, could be available to use within a week — or hours — and provide different types of repayment schedules. Make sure your choice reflects the current state of your business. Some products, like merchant cash advances and invoice factoring, require repayment taken directly from your daily sales. Be mindful of repayment terms if you’re experiencing a slowdown.
• Learn more about emergency business financing