This article is part of a series on how handmade businesses can access services to keep their operations running during the COVID-19 crisis.
In the US, Congress has passed the Coronavirus Aid, Relief and Economic Security (CARES) Act. This is designed to provide assistance to small businesses that are affected by the COVID-19 pandemic and is funded directly from the US Treasury.
This act, amongst other initiatives, introduced an expansion of the existing Economic Injury Disaster Loan (EIDL) program. This program has been in place to provide disaster relief to businesses, home owners and renters so has thus been expanded in scope to include the current coronavirus situation.
The Economic Injury Disaster Loan program aims to offer more financial support for businesses experiencing reduced revenue due to coronavirus and is available to companies in all US states and territories.
The program provides working capital to small businesses in the way of low-interest loans. The interest rate for the loan is capped at 3.75% and can have terms of up to 30 years. You can also request a $10,000 loan advance as part of this package. There is no cost to apply, and no obligation to take the loan if you are approved.
To apply for the Economic Injury Disaster Loan, you can do this online - the Small Business Administration (SBA) has simplified the process to streamline applications. Once approved, the SBA will distribute your loan advance in around three days.
The funds can be used for rent and other fixed costs, payroll, accounts payable and some other bills if they could have been paid if the pandemic did not occur.
You can apply for a disaster loan and also for the Paycheck Protection Program - the key thing to note is that the funds for both need to be used for different expenses (i.e. you can’t pay for the same employee costs via the disaster loan if you are already covering these with the Paycheck Protection Program).
When applying, you’ll need to provide evidence of:
- a good credit history
- your ability to repay the loan
- how your business has or is likely to suffer as a result of COVID-19
- your business structure
- the fact you don’t currently have credit available elsewhere
Tip: To ensure you are not delayed in receiving the funds, you’ll want to ensure you provide clear and detailed documentation - if your application is rejected due to missing documentation then you will return to the back of the queue.