Now that the $2 trillion stimulus bill has passed the Senate, some details are starting to firm up.
One of them is that if you have employees, and have managed to keep them through this crisis, you may be eligible for a very attractive SBA loan under the new bill.
Here’s a link to today’s update from the Wall Street Journal. If you think you might qualify, set up a Google search or something to keep you informed and plan to be one of the first to apply.
Key points that appear to be taking shape:
- The loan amounts can be fairly high;
- The interest rate is low, probably 4%
- There is a 6-12 month deferral before the first payment is due
- There are some loan forgiveness provisions in the event of default.
In other words, this is the type of loan I would recommend that qualified Edge members pursue…even if you don’t think you need it! There (hopefully!) won’t be an opportunity like this for a good, long while.
Many lenders are being aggressive right now. Perhaps their intentions are noble…but probably not. Still, if the interest rate has a reasonable cap on it, it could be a time to extend your credit lines…even if you hope not to use them. Consider:
- Plain Jane credit card lenders like MasterCard are surprising people with the higher limits they’re offering. One Edge member recently applied and was hoping for a $5,000 credit limit; she got $18,000.
- Call your existing credit card companies and ask for an increase. Some will even do this for you online. I’ve figured out the timing for my corporate American Express and increase the limit about $5,000 every six months…just by clicking on a button.
- If you have a bank line of credit, talk to them about increasing that…
- Google “personal loans.” This is likely easier to get than a business loan and if you’re concerned about keeping things separate, you could then loan that money to your corporate or LLC entity. There are countless new lenders out there including many peer-to-peer such as Lending Tree. I got a very nice loan a couple of years ago from Marcus, a subsidiary of Goldman Sachs. Reasonable interest rate, convenient terms and no pre-payment penalty which I required since I knew I was going to pay it back in less than a year.
IF YOU HAVE OTHER SOURCES OF CREDIT, PLEASE SHARE THEM IN THE COMMENTS TO THIS POST.
2 thoughts on “SBA Loan Update”
For those in Florida, connect with the DEO, Fl Dept of Economic opportunity. Your Business can apply for a $50,000 loan at 0% interest for 12 months, then it’s 12% after that. Applications are found at Disaster@FloridaSBDC.org
Thanks for the top. Also stay on top of the new SBA program if you’ll keep, or hire back your employees. Details are still coming into focus, but it looks like they’ll loan you 4-8 weeks of your total payroll, and then basically forgive the loan!
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