May 2, 2020
COVID-19 Business Assistance
May 2, 2020 (Washington, DC) -- On April 24, the federal government replenished funding for the Paycheck Protection Program (PPP) for businesses and nonprofits, including gurdwaras. This was the second installation of federal funding and likely not the last. Following our email from last weekend, we wanted to provide additional information for small business owners and nonprofits should know as they are seeking financial assistance.
Beware of Scams
There are a number of scams targeting business owners--especially those with limited english proficiency. The Small Business Majority has created a resource for business owners to avoid predatory lending
. Use a Small Business Administration (SBA) approved lender to reduce the risk of scams.
Apply for the Forgivable PPP Loan
If a business has not applied yet or wants to prepare for the potential next round of federal funding, identifying a lender to work with is the first step. If you have already applied but are not making progress, consider a different lender. It is strongly recommended that businesses obtain funding only from an SBA-approved lender. To find a lender that is providing SBA-approved loans, visit the SBA’s website
There have been numerous reports that community banks did a better job managing applications, while larger banks focused on serving customers with whom they already had a relationship. Please note that some banks are prioritizing those who have a business banking account over those with a personal banking account.
If you don’t have a good banking contact, get a referral from a trusted partner. If you don't have a relationship with a bank, it is recommended to use a community bank, credit union
, or community development financial institution
. You can also use reputable online lenders like Paypal and Intuit to process your loan.
PPP Loan Terms
Loans are available for up to $10 million or 2.5 times the average monthly payroll (whichever is lower). The entirety of the loan could be forgiven if you follow the stated guidelines. Businesses cannot count payroll in limited circumstances for employees that earn a salary above $100,000 or live outside the United States.
The loan does not require providing any collateral or a personal guarantee. The loan lasts for 2 years with a fixed interest rate of 0.5 percent per year. Repayment of the principal, interest, and fees is deferred for at least 6 months (with interest continuing to accrue during deferral). Principal payments will be due in two years, and there is no prepayment penalty.
To calculate your loan amount, click here. To see what information is needed to complete the loan application, click here.
Apply for Economic Injury Disaster Loans (EIDL)
Unlike PPP, this loan is not forgivable--but it can assist small businesses experiencing a temporary loss in revenue. This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors, and self-employed persons) or private non-profit organizations.
Advance funds of $10,000 will be made available for businesses with at least 10 employees within three days of application; smaller businesses will get $1,000 per employee. This advance fund will not need to be repaid. It is not necessary to have an approved EIDL loan to get the advance--however, if you are able to secure a PPP loan, the advance will be subtracted from the forgiveness amount.
EIDL Loan Terms
The maximum loan amount is $2 million at a rate of 3.75 percent for businesses and 2.75 percent for nonprofits (including gurdwaras) with a maximum of a 30-year term. Payments are deferred for one year, and up to $200,000 can be approved without a personal guarantee. Collateral is not required for loans of $25,000 or less. See a checklist of what is required to obtain an EIDL loan.
Follow Up with the Lender
Don’t just apply once and hope for the best. Make sure to follow up with the lender and ensure your application is processed. Some lenders are asking consumers to sign notes before approval. The application is approved and in process only when you receive an SBA Loan Number.
If you are having problems understanding what financial assistance is available to your business or how to apply, you can also locate a local SBA partner
. The SBA may also have microloan options available for lenders to provide to your business; however, those loans would not be forgiven like the PPP loan.
Look for Other Funding Opportunities
Your business may also be eligible for additional funding opportunities from state and local governments. To learn if your state has financial assistance options, click here
. Furthermore, several non-governmental organizations are providing grants
to small businesses affected by COVID-19.
Renegotiate Business Expenses
Lastly, for businesses that are experiencing financial hardship, you can also attempt to negotiate with customers and vendors. Landlords may also be able to negotiate rent
based on your hardship, or you may also request a deferment with mortgage servicers.
The Sikh Coalition will continue to provide additional information and resources
as the federal government enacts additional assistance that can help individuals, businesses, and gurdwaras impacted by COVID-19.
As always, the Sikh Coalition urges you to practice your faith fearlessly.