Emergency Loan Resources for Entrepreneurs
Tuesday, April 21st, 2020
The effects of this COVID-19 crisis have been felt nationwide. Entrepreneurs need to be flexible and adaptable if they want to see their companies survive this nationwide lockdown. The Small Business and Technology Development Center (SBTDC) and the U.S. Small Business Association (SBA) has a variety of resources for small companies under COVID-specific duress. A variety of local capital relief resources also exist – including the NC Rapid Recovery Loan Program and NC county-specific relief funds found in the Duke Case Capital Relief Database. This post serves as a synopsis to spread awareness of these emergency loan programs so you may incorporate them into your near-term COVID strategy should you require them. Loans and resources covered:
Federal – Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL, EIDL Advance)
NC – Rapid Recovery Loan Program
Additional Resources – Duke CASE Capital Relief Database, SBTDC Counseling
Update: As of April 21st the Senate approved an additional $310B to support the Paycheck Protection Programs (PPP) and Economic Injury Disaster Loans (EIDL). Additional resources will likely be allotted after the House votes on Thursday, and you could find yourself first-in-line.
SBA Paycheck Protection Program (PPP)
The CARES Act included $349B for loan program designed to incentivize business owners to keep employees on payroll. The Paycheck Protection Program provides up to 8 weeks of payroll costs, with benefits. This loan is forgivable if all employees are retained and if 75+% of the loan is used for payroll purposes.
Eligibility: < 500 employees. Small businesses, sole proprietors, independent contractors and self-employed individuals can apply. Employees paid in excess of $100k annual salary do not qualify to have their paycheck protected through this loan.
Loan Terms: 1% interest rate. Interest payments deferred for 6 months. Loan is forgivable, any unforgiven portion will need to be repaid within 2 years. Collateral pledges unnecessary
NC Applicants Apply Here
SBA Economic Injury Disaster Loan (EIDL)
The US Small Business Administration is offering federal disaster loans for small businesses who have suffered substantial economic injury due to COVID-19. Applying for the PPP does not preclude you from applying for an EIDL loan, provided the EIDL loan is used to cover non-payroll costs. Normally EIDL loans are reserved for specific areas affected by natural disasters, however due to COVID-19 all US states are now eligible. Of particular importance here has been the emergence of the EIDL Advance, which offers up to $10k that does not need to be repaid, even if your EIDL loan is rejected. EIDL loans can be used to pay fixed debts, payroll (provided you have not been awarded a PPP loan), accounts payable, and other bills that COVID-19 is currently impeding you from paying. The SBA uses your provided information to determine the loan amount – up to a secured $2M and unsecured $25k.
Eligibility: < 500 employees. Small businesses, sole proprietors, and independent contractors may apply. Applicants must provide acceptable credit history as deemed by SBA. Applicants must show future ability to repay loan. Applicant businesses must be located in declared disaster area (currently the entire U.S.).
EIDL Loan Terms: 3.75% for small businesses, 2.75% for non-profit organizations. Loans over $25k require collateral. First 12 payments are deferred (1 year). Up to 30 year loan.
EIDL Advance Terms: No interest, entirely forgivable. $1k per employee, up to $10k. Collateral is not required.
Timeline: 2-3 weeks for SBA decision, 7 days to receive funds if accepted.
Find the EIDL and EIDL Advance Application here
NC COVID-19 Rapid Recovery Loan Program
This lending program supports North Carolina-based small businesses affected by COVID-19. The rapid recovery loan helps small businesses bridge the gap between federal loans and other relief sources. Repayment of this loan is expected from future business cash flow. Loans are available for up to $50k, and are capped at ~2 months of current business revenue. Loan funds can be used to
Eligibility: Businesses must be in NC. Must have begun operations before March 23rd, 2020.
Loan Terms: Up to $50k. 6 months deferred payments, without accruing interest, followed by 48 months of payments at 5.5% interest rate. No prepayment penalties. If individual has greater than 20% ownership in applying business the loan must be personally guaranteed
Timeline: Not stated. “Committed to moving quickly.”
Find the Application Here
Duke CASE Capital Relief Resource
Duke has put together a highly comprehensive listing of organizations providing capital relief, including grants, loans, and other cash equivalents totaling $710.6B as of 4/17/20.
Find the Program Here
SBTDC Individual Counseling
The SBTDC offers individual virtual counseling for assistance with disaster capital and continuity planning.
Schedule Counseling Here
Mike is a PhD-trained medical device and digital health enthusiast. In Jan 2020 Mike joined Prinnovo, a company which establishes, staffs and manages Health Venture Offices for health systems, and currently serves as the Venture Manager of Cone Health Ventures. Prior to Prinnovo/Cone Health, Mike gained VC experience as a consultant for Catalyst Health Ventures and through a fellowship at Hatteras Venture Partners.