How to Apply for Business Loans during the COVID-19 Pandemic

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HOW TO APPLY FOR

• Business Loans during the COVID-19 Pandemic

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The current COVID-19 pandemic has significantly
affected small businesses across the world. Many
curtail their operations, while some closed their
doors temporarily without knowing the time to
reinstate. This current situation has created
upsetting financial burden and businesses are in
need of quick financial support to navigate the
storm. A small business loan can help you ride
out the storm by serving as an extra lifeline
through this challenging time. If youre a new
business owner or want to know how to apply for
business loans in coronavirus pandemic, here is a
handy guide to help you understand the process of
securing business loans during the coronavirus
pandemic.
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Why You Should Apply for a Business Loan?
You might need to purchase equipment or expand
operations, or simply need to increase working
capital for your business. Under such situations,
getting a business loan can help especially when
sales are dried up during a crisis like this.
During a crisis, a business loan can help in you
many ways including When sales and revenues are
low, replace your lost cash flow with cash flow
loans. This additional financial support can help
you pay bills and act as a cash cushion until you
start making money again. When a crisis happens,
you might need to store and care for your assets
(equipment and inventory). With a business loan,
you can pay for storing costs, while sustaining
the upkeep and repairs. Even during such
challenging times, youve to pay for rent,
equipment, payroll and utilities as normal. A
business loan can help you with such expenses
while retaining your assets and protecting your
credit score. Because of the pandemic, making
direct sales is not possible. However, it does
not mean you cant make sales and reach
customers. Getting a business loan is a solution
to initiate your online marketing campaigns
creating a new stream of money for your small
business.
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Coronavirus Business Loan Options
There are many business loan options available
for businesses affected by the coronavirus.
From SBA loans to alternative lending and
traditional loans, there is a variety
of coronavirus small business loan programs for
small businesses. The Federal government recently
passed the CARES Act with the largest economic
bill of 350 billion as financial support for
small businesses administered via the Small
Business Administration (SBA).
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Paycheck Protection Program
A forgivable Paycheck Protection Program (PPP)
loan is started where applications are being
accepted starting from the April 3rd. The loan is
based on your situation and can be used for
payroll, rent, utilities, and business debt
interest. Visit SBA.gov site to read the details
about the Paycheck Protection Program. This
program funding is on a first-come, first-served
basis.
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Economic Injury Disaster Loans
The SBA is also offering several loan programs,
including Economic Injury Disaster Loans, SBA
microloans, and 7(a) loans. Discover the SBA loan
options on the SBA.gov website. Many states and
local governments are also offering financial
assistance to small businesses. There are some
restrictions in order to take out a loan that you
should read before making a loan application and
to ensure your eligibility, such as keeping your
employees on payroll in order to get the loan.
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Alternative Lending
You can also secure small business loans from
alternative lenders. These online lenders are
specialized in providing quick business
financing, where you can get approval in 24
hours, cash within days, and at flexible
repayment terms and lower rates. A business loan
from alternative lenders is a great option for
emergency loans.
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Traditional Loans
You can also get funding from traditional sources
like banks and credit unions. However, the loan
application process is lengthy with extensive
paperwork requirements. The approval process can
take several weeks and even months to qualify and
you might not get approved during a crisis, as
they are worried about losses.
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Preparing for Business Loans
Here are a few steps you can take to prepare for
the business loan application. Review your Credit
Report Your credit score is the major deciding
factor whether you qualify for a loan or not. Get
your credit reports from top credit rating
agencies (Dun Bradstreet, Equifax, and
Experian) and review it for any mistakes or
errors. Gather Financial Documents While making
a loan application, gather your financial
documents including tax returns, bank statements,
business financial statements, a list of your
current business assets and debts along with a
plan for how youd use the loan. Offer
Collateral In order to increase your chances of
approval for a loan, consider offering
collateral, such as a valuable asset, equipment
or real estate. Review Lenders Requirements
Different lenders have varied lending
requirements. Make sure you read every fine print
before you make an application with a lender. Ask
for Professionals Assistance While making a loan
application, its advisable to get assistance
from a professional accountant or tax consultant
especially for government funding. The details on
such loan programs are changing regularly which
is why getting help from them can get you to
qualify for funding.
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The Business Loan Process and Timeline
After youre ready with your financials, plan and
necessary paperwork for a business loan, reach
out to your target lender to make the loan
application. Small business loans from the
government have different processes, where
lenders might ask you to apply on their Division
of Small Business website. For private lenders,
you typically have to fill out an online
application, or you can call them to discuss your
needs with a loan specialist. For almost any
application, you typically have to provide your
basic information and the amount of money you
need. The lender will explain his requirements
and list of necessary paperwork including your
financials, business revenue, business plan, and
proof of payroll, and bills that typically
required for coronavirus loan application.
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The approval depends on the lender. If youve
applied to alternative lenders, you will
typically get approval and funding within days,
while government and traditional lenders take
time with extensive paperwork requirements. One
quick way is to get small business loans from
alternative lenders and, if you qualify for a
government loan program, you could use this loan
to repay the online loan with an added benefit of
no prepayment penalty. For more information, you
can fill out this application and a loan
specialist will contact you instantly to start
discussing your loan options. The COVID-19
pandemic is a great challenge, and together we
can overcome it. By capitalizing on business loan
options during the coronavirus outbreak, you can
ensure the financial stability and growth of your
business once everything gets back to normal.