As the country shifts into economic recovery mode and looks toward a post-pandemic future, 2021 will likely be a time of transition for many small businesses as they work to rebound.
During the pandemic, Congress directed additional resources to the Small Business Administration (SBA) to provide emergency funding and keep business capital flowing. Some of these programs have ended, some are winding down, and some are still open – leaving many to wonder which SBA COVID-related resources are still available during the recovery.
Here is a status review of different SBA programs as of June 2021.
Paycheck Protection Program
The Paycheck Protection Program (PPP) was an emergency loan program designed to provide a direct incentive for small businesses to keep their workers on payroll. Borrowers must meet certain criteria to obtain a PPP loan and the loan must be used for specific expenditures, such as maintaining payroll. If the criteria is met, borrowers can qualify to have the loan fully forgiven.
The program was set to expire on May 31, 2021, but the SBA confirmed in early May that the program had exhausted its funds before reaching the closing date.
Currently, businesses can no longer apply for a PPP loan. Borrowers have until the maturity date of the loan to apply for loan forgiveness.
Emergency Economic Injury Disaster Loans
In response to COVID-19, the SBA expanded eligibility for its Disaster Loan program, allowing small business owners, agricultural businesses, and nonprofit organizations across the entire U.S. to apply for a COVID-19 Economic Injury Disaster Loan (EIDL).
The EIDL program provides low-interest loans that can be used for working capital and normal operating expenses. In April 2021, the loan limit was raised to $500,000. Unlike a PPP loan, an EIDL loan is not forgivable but can be repaid over 30 years.
In 2020, EIDL applicants could receive a forgivable $10,000 advance on an EIDL loan. As of July 2020, the funds for EIDL advances were depleted and are no longer available. In December 2020, a new program called the Targeted EIDL Advance was created specifically for organizations in low-income communities. You cannot apply for a Targeted EIDL Advance; the SBA is currently reaching out to previous applicants who qualify.
The SBA is still currently accepting new applications for EIDL loans, but borrowers can no longer apply for a forgivable advance. Learn more about how to apply for an EIDL loan.
SBA 7(a) Loans
7(a) loans can be used for a wide array of purposes that include equipment, inventory, real estate, and working capital. Borrowers can obtain loans up to $5 million at fixed rates. Unlike a conventional business loan, it does not have to be fully secured with collateral and has longer repayment terms.
COVID relief enhancements to the 7(a) program include three months of payment relief (three months of P&I payments made by the SBA that do not have to be repaid and are considered nontaxable income) and a waiver of fees.
COVID relief enhancements are available until Sept. 30, 2021.
SBA 7(a) loans are always available to eligible small businesses through a participating lender. Contact the VITAL team for more information.
Restaurant Revitalization Funds
The Restaurant Revitalization Fund (RRF) was established in March 2021 to target restaurants and other eligible businesses hard-hit by the pandemic and in danger of closing.
The program provides restaurants with funding equal to their pandemic-related revenue loss of up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses by no later than March 11, 2023.
Applications opened on May 3, 2021, and the funds were exhausted by May 24. Applications are no longer being accepted.
Shuttered Venue Operators Grant
The Shuttered Venue Operators Grant program provides emergency assistance to venues affected by COVID-19. Businesses that have suffered the greatest economic loss are prioritized to have their applications processed first.
Eligible applicants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. $2 billion is reserved for eligible applications with up to 50 full-time employees. Grant funds must be used for specific expenditures as outlined by the SBA.
The SBA is currently accepting SVOG applications. Learn more about how to apply.
The SBA team at VITAL is a knowledgeable and experienced resource for SBA 7(a) small business loans. Contact us to learn more.