Phyllis Kimber Wilcox |
During the COVID-19 pandemic, the Small Business Administration (SBA) responded to the needs of businesses struggling to stay open and / or recover from damage resulting from economic stress caused by the outbreak of the virus.
This response was essential to ensure the continued recovery of the economy.
While the impact of this crisis has been shared across all levels, small businesses have been hit hard. And black-owned businesses, which at best have a more difficult path to success, have been hit particularly hard by the pandemic.
Earlier this year, IE Voice introduced black business owner Marcus Jinks. Jinks owns MK Beauty Supply in San Bernardino. While he received a grant to cover his personal protective equipment (PPE) needs, at the time of the interview, Jinks was anxiously awaiting approval of his SBA loan application to expand his business. “I wanted to get an SBA loan,” Jinks explained. “Well, I applied for one,” he added before stating. “I’m still waiting for an answer. ”
His frustration with the delay in processing his loan by the SBA was not an aberration. Small business loans under normal circumstances can take longer than other types of loans; and while the time needed for SBA loan approval has improved from what it was in 2020 and earlier this year, the delays experienced by Jinks and others were the result of overwhelming demand.
Despite the delays this year, the SBA approved over 6.5 million loans totaling over $ 275 billion, the average loan size was $ 42,000, 96% of loans were made to companies under 20 employees and 32% went to low to moderate businesses. income communities. All of this reflects an improvement in the equitable access and approval of these loans.
Are COVID-related loans still available for small businesses?
Although the window to apply for the latest round of funding through the California Small Business COVID-19 Relief Grant Program closed on September 30, 2021, there are COVID-19-related small business loan programs still available through the SBA.
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Economic Disaster Lending Program (EIDL)
The EIDL or Economic Injury Disaster Loan Program helps businesses that experience a temporary loss of income due to the pandemic. This program accepts applications until December 31, 2021.
These loans can be used for usual and customary expenses such as working capital and normal operating expenses like maintaining health care benefits, rent, utilities, fixed debt payments, etc. The maximum loan amount is five hundred thousand dollars and covers up to twenty-four months of business losses.
Debt Relief For Certain SBA Loans
Debt relief is offered for some SBA 7 (a) and 504 microloans under the CARES Act.
The 7 (a) loan is the SBA’s “most common small business loan program”. There are however special requirements associated with these loans.
“The CDC / 504 loan program provides long-term fixed rate financing of up to $ 5 million for major capital assets that support business growth and job creation. Businesses are encouraged to contact their lender with any questions about the availability of this help.
Paycheque Protection Program
The Payroll Check Protection Program provides payroll protection to businesses that operated during the pandemic. On August 4, 2021, the SBA launched a new loan forgiveness platform to allow paycheck protection program (PPP) borrowers of $ 150,000 or less through participating lenders to apply for a delivery directly via the SBA. However, lenders must join the program for borrowers to participate. Borrowers who need help or have questions should call (877) 552-2692, Monday through Friday, 8 a.m. to 8 p.m. EST.
What worked and what changed
While programs offered by the federal government and administered through the SBA have proven to be effective, there were early problems that prevented many small businesses – especially black businesses – from accessing available funds. . Many did not have formal relationships with the banks responsible for administering the funds.
There were also challenges for businesses that didn’t have the money to keep operating during shutdowns or that lacked capital to pay for expenses and overheads.[1] Subsequent funding rounds were established to help these struggling businesses.
The SBA made attempts in subsequent funding rounds to ensure these issues were addressed. The Black Voice News spoke with the SBA, Small Business Administration about the Cameo program which makes microloans available to small businesses with funding from the Covid 19 pandemic.
The Black Voice News talked with Carolina Martinez[2], CEO of Cameo regarding programs available to help small businesses during COVID-19. When asked what are the common attributes of companies that are successful in securing these loans, Martinez explained how the agency has seen a lot evolve since the program began. “But certainly, we see the importance of understanding which businesses are eligible and simply submitting the appropriate documentation as keys to success.”
She continued, “There is definitely a higher demand, probably [more than the] funding available. So it really depends on how small businesses have been affected by COVID. “
Top reasons why businesses are turned away
According to Martinez, among the main reasons why companies are denied these loans is because they do not meet one of the main requirements which, in addition to the points mentioned above, includes the need to have been in business before June 1, 2019.
She stressed, “It’s really about making sure that all the requirements are checked and that they really meet the purpose of the program. The loan programs are very eligibility and demand driven, she said.
To look forward
Commenting on loan opportunities for women and minority-owned businesses, Martinez said, “We have different programs in place to really help women and minority-owned businesses and black people in particular. We hope that many of the efforts that have been made to streamline the processes of current programs will help reach these communities. “
Martinez said she was waiting for more information on a pilot program called Community Navigator, which aims to reach these communities, “to guide them and help them navigate post-pandemic resources to help them continue to grow.”
Martinez recognized the importance of outreach to ensure that the communities most in need of this help are aware of the program. “The SBA takes a holistic approach to ensure underserved communities are aware of the entire supporting ecosystem [available to them through the SBA]. “
To that end, Martinez explained how the SBA tries to find these small businesses where they are and provide them with trusted partners. These community partners have connections in the communities they serve and will help women and minority-owned businesses navigate the various program requirements.
Martinez believes that what can prevent small businesses from taking advantage of SBA programs is that a lot of companies are just not aware of what’s available. The SBA is trying to solve this problem, as it has previously confirmed, by meeting with eligible companies where they are located. This includes the use of pop-up shops, door-to-door sales, and the use of partner organizations to spread the word, including in rural and indigenous communities.
The SBA empowers small businesses to meet the challenges ahead by providing the support, funding, and information necessary to assist small businesses in their continued development.
Phyllis Kimber-Wilcox is a freelance writer reporting for Black Voice News. His interests are the intersections of historical events with contemporary realities and their impacts on the lingering social, structural and economic barriers that continue to affect and limit the lives of black people for the sake of community solutions. Contact Phyllis with advice, comments. or concerns to phyllis@blackvoicenews.com.