As summer progresses, so do small business efforts to learn about and adapt to the effects of COVID-19. Yet even as more businesses begin to reopen their doors, bolstered by guidance and loan resources from the Small Business Administration (SBA), questions and uncertainties in today’s pandemic environment continue to abound.
Growth Capital has taken numerous steps to help small businesses throughout Northeast Ohio. Most in demand is assistance navigating the complexities of the SBA Paycheck Protection Program (PPP) for financial assistance.
The Payment Protection Program Explained
The purpose of the PPP is to encourage small businesses to keep their workers on payroll during this volatile time. The SBA agrees to forgive a PPP loan if all employees are kept on the recipient company’s payroll for eight weeks. The funds must be used for payroll, rent, mortgage interest and/or utilities.
The impact has been profound.
Locally, Growth Capital was able to approve its first PPP loan two weeks after beginning to assist clients with the program with the help of an innovative partnership with Fifth Third Bank. Since then, this partnership has seen millions of dollars in PPP loans provided throughout the region. The average size of these PPP loans is about $67,000—reflecting the truly small businesses that employ the friends and neighbors in our community.
While the application deadline for the PPP program was June 30, there are still many unanswered questions for those small businesses who have applied for this program, but have either not yet been approved, received the funds, or heard back from the SBA.
On June 5, the President signed the PPP Flexibility Act to extend the deadline for the PPP covered period and outside rehire/salary restoration date to December 31, 2020.
What does that mean for small businesses?
If you’ve already applied for the PPP loan and been approved, you have until the end of the year to spend your funds and restore the salaries of applicable full-time employees. If you have been approved for a PPP loan with Growth Capital and it has not yet been funded, hang in there—we’re continuing to close loans as fast as possible, so you can take advantage of this extension.
For those still waiting on approval, it’s critical to note that the SBA has exhausted its lending authority. While Growth Capital has been able to process and approve upwards of 100 PPP loan requests submitted in the last few weeks, there are still several hundred more in waiting.
The bottom line?
In the current environment, borrowers and applicants should understand that many eligible businesses will unfortunately be unable to obtain a PPP loan.
Alternate Options for Financial Support
If you’re unable to secure a PPP loan, are still waiting to hear on the status of your application or are in other ways struggling to maintain you small business through the effects of the coronavirus—there are other options available to you to pursue.
The SBA offers alternate loan options for pandemic relief, such as the Economic Injury Disaster Loan Program—which provides small businesses up to $150,000 in aid, plus an emergency grant of up to $10,000. (Apply here.) There are also traditional SBA loans, such as the 7(a) loan or the SBA 504, which could provide you with up to $5 million in funds.
Additionally, the Federal Reserve is offering a Main Street Lending Program for small to mid-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic. Through this program, lenders can provide up to $250,000 in funds to approved organizations.
Get Help With COVID-19 Relief for Your Small Business
Growth Capital is committed to staying on top of the loan options available to small businesses for financial relief in the face of the pandemic. We’re doing our best to stay educated, knowledgeable and helpful to our small business borrowers and banking partners—and will continue to do all we can to assist every small business that seeks our help.
Have questions or need help navigating your small business loan application options? Trust the experts at Certified Development Company (CDC) Growth Capital to assist your company and its needs throughout the process. Contact us today at (216) 592-2332 or online.