The state’s Office of the Governor hosted a webinar on April 15 highlighting four loan services available through the Small Business Association for business owners who may be financially struggling as a result of the ongoing coronavirus pandemic.
“This is an unprecedented time,” said Adriana Cruz, Executive Director of the economic development and tourism division of the Office of the Governor. “The situation for our small business community is critically important, and we have been participating in webinars in partnership with the Texas Workforce Commission. Since we cannot do in-person events right now, the team thought it would be worthwhile to host some webinars to continue to connect our small businesses with resources and experts.”
The webinar featured Joe Harper and Richard Sifuentes, executive directors of the Small Business Development Centers at Texas State University and the University of Texas at San Antonio, respectively.
The SBA is currently offering four loan programs to support small business owners at this time.
The Paycheck Protection Program is a fee-less loan administered by 7(a) lenders and is designed to incentivize small business owners to keep their employees on a paycheck by providing payroll expenses for up to two and a half months.
The loan is administered through participating lenders and the awarded amount is calculated according to the business’s aggregate monthly payroll costs over the last 12 months. However, amounts exceeding $100,000 salaries will not be included; the timeline for expenses to be covered runs from Feb. 15-June 30.
The SBA can administer loan forgiveness if business owners are able to retain at least 75% of payroll expenses and maintain that money awarded is used for expenses relating to payroll, rent, mortgage interest or utilities. Payments for the loan will also be deferred for six months.
Harper said new third-party lenders have been recently added to administer the loan including PayPal, Square and Intuit. However, Harper said applicants may face challenges in finding participating lenders.
“So the challenge is we're running out of money,” Harper said. “As of this morning, there was [over] $247 billion out of $346 billion allocated that had been already committed, and there's about or near $22 billion in Texas alone.”
Additional assistance
The Economic Injury Disaster Loan emergency advance is administered by the SBA and is used to help business owners cover operating expenses such as rent, utilities and accounts payable.
The loan has a 3.75% interest rate for businesses and 2.75% interest rate for eligible nonprofit organizations. Additionally, the EIDL offers an up to $10,000 forgivable advance, with $1,000 allocated per employee, according to Sifuentes.
“One thing that needs to be understood is that the advance is completely forgivable even if you don't get the loan or turn down the loan; the advanced grant piece of it—up to $10,000—is completely free money,” Sifuentes said.
Sifuentes said eligible business owners can expect to receive funds about two weeks time.
“Initially, [EIDL] was advertised as a three-day ... receipt of funds for the advance and for the grant,” Sifuentes said. “It's taking probably about two weeks, ... yesterday and today we're starting to see clients see deposits in terms of the grant and the advance turning up in their bank account, so that's good news.”
Businesses who have applied for PPP loans or with current SBA loans are also eligible for the EIDL.
The SBA Express Bridge loan is designed to provide immediate support of up to $25,000 for small business owners applying to the EIDL.
According to Sifuentes, business owners must have an existing business relationship with SBA Express Lenders and repayment can be paid in full or in part by awards received through the EIDL.
“[SBA Express Bridge loans] can be used as a term loan and it's basically ... a gap measurement while you're applying for the EIDL,” Sifuentes said. “It’s kind of a loan just to get you through the early going.”
The SBA also administers SBA Debt Relief that pays for the principal, interest and fees for current 7(a), 504, and microloans issued prior to Sept. 27 for a period of six months, starting April 1.
Harper said business owners will be eligible for up to 90 days of deferment at the end of the debt relief period, potentially allowing up to nine months without payment to ease the burden of cash flow.
“If you haven't made that deferment, then this is automatic," Harper said. "You don't really have to do anything but check with your bank, make sure that the payments are being made [and] make sure you understand when your obligation is going to begin again.”
For more information, visit the Office of the Governor’s additional resources online or contact [email protected]. The Economic Development and Tourism department can also be reached at 512-936-0100.
