The accepted truth is that COVID-19 is changing the way we do business. But Loan Mantra knows you’re also concerned about the here-and-now. That’s why we’re here to help your business weather the financial storms brought on by the pandemic while you prepare well for tomorrow. Loan Mantra has developed a list of popular and reliable loan products that can provide you with critical cashflow that you need now.
Though business owners may feel some relief from the initial panic they experienced in March, most are still concerned about the long-term effects of COVID on their businesses. Today, a poll by the U.S. Chamber notes 82% of small business owners continue to be “highly concerned about the impact of COVID” on the future of their businesses.
Middle markets are similarly burdened. In a survey from the National Center for the Middle Market at the end of June, 2020, respondents listed ongoing uncertainty (66%); employee engagement and productivity (59%); maintaining customer relationships (57%); continuity of operations (51%); and working capital and cashflow (38%) as top challenges as a result of the pandemic.
There is much to be learned as we go forward. Yet, the question remains: How can businesses weather a storm that could wage on for an unforeseeable future? And how can business owners receive necessary funding to survive unprecedented difficulties caused by COVID-19?
Loan Mantra is here to help. Here is a quick snapshot of each loan product, SBA and otherwise, and how it can help your business now:
Paycheck Protection Program (PPP):
Overview: The PPP is meant to help small business struggling with COVID-19. It is available to small businesses, sole proprietors and independent contractors. The Program was extended through August 8, 2020 with $130 billion left in funding. The quick terms are as follows:
- Loan amount is up to 2.5x your business’s average monthly payroll costs.
- 1% interest rate (fixed)
- 5-year term, with payments not required until loan forgiveness is determined
- No fees
- Loan is forgivable if the business complies with rules regarding usage of the funding, most notably the 60/40 ratio (60 percent of loan used for payroll, 40 percent on rent, utilities and other approved uses). See more about PPP loan forgiveness here.
- No personal guarantees or collateral is required
SBA’s Economic Injury Disaster Loan (EIDL):
Overview: The SBA’s EIDL program offers low-interest disaster loans up to $2 million to support businesses in all U.S. states and territories. Its purpose is to support businesses’ working capital needs as a result of economic injury due to COVID-19. While the EIDL grant program closed in early July after reaching its $20MM cap, applicants may still apply for EIDL.
- Loan amount up to $2M, including affiliate loans. The amount of an EIDL is determined by the SBA’s assessment of the business’s losses due to COVID-19.
- 75% fixed IR
- 30 years term
- There is no prepayment penalty and borrowers may request a one-year deferment on the loan, though interest will still accrue during this period.
- PPP loans can be used to refinance EIDL
- EIDL may only be used to alleviate economic injury resulting from the COVID-19 pandemic, including fixed debts, payroll, accounts payable. EIDL may not be used to replace lost sales, refinance long-term debt or for expansion.
SBA Express Loan (SBA Express):
Overview: The SBA Express Loan is a 7(a) product, known for its accelerated turnaround of 36 hours.
- Loan amount up to $350k; now up to $1MM (until Jan 1, 2021)
- Maximum SBA guarantee of 50%
- Negotiable interest rate, but it may not exceed SBA maximum
- Credit is ultimately determined by the lender (using lender’s credit policy)
- Up to seven years term with maturity extensions permitted at the outset
Main Street Lending Program (MSLP):
Overview: The Federal Reserve is currently working to create the infrastructure necessary to fully operationalize the Program. Loan Mantra will keep you updated as the Main Street Lending Program becomes able to serve you well. When that occurs, we will navigate all requests related to the MSLP. Until then, please note the following about the Program in case it’s a fit for the future:
- The Federal Reserve and U.S. Treasury originated MSLP to serve small and middle-size business that were on solid financial ground before the COVID-19 pandemic. The aim of the Program is to support lending to businesses unable to receive PPP loans. Unlike PPP loans, MSLP products are full-recourse loans and are not forgivable.
- The Program is hosted by Main Street New Loan Facility (MSNLF), Main Street Priority Loan Facility (MSPLF), and Main Street Expanded Loan Facility (MSELF).
- MSNLF loan amounts range between $250,000 and $35 million; MSPLF loan amounts range between $250,000 and $50 million; MSELF is designed to meet the needs of borrowers with existing loan arrangements, particularly those ranging in size from $10 million to $300 million.
- Lenders can charge and collect a 1% fee on each loan.
- The program is scheduled to end September 30, 2020, unless extended by government.
Loan Mantra is here to help you:
There are plenty of SBA loan products available for borrowers of all sizes. But we know it can feel daunting to choose the right one. You may need help navigating any one of these products–whether that means choosing the right loan, starting an application or seeking loan forgiveness. Loan Mantra is here for you! Let us help you determine the right way to weather the storm today so we can help create your brighter future tomorrow.
Get in touch with us about the PPP, EIDL and SBA Express Loans now!