As the year ends, so do many of the funding programs that helped small businesses through the coronavirus pandemic.
The deadline for a U.S. Small Business Administration (SBA) COVID-era program is only a couple of weeks away and they are advising business owners to submit their online applications and reach out with questions before Dec. 31.
The SBA’s COVID-19 Economic Injury Disaster Loan (EIDL) program provides working capital to help businesses meet operating expenses and rebound from the pandemic.
Applications for this federal relief program will be accepted until Dec. 31 and will continue to be processed after this date until funds run out, according to the SBA.
The EIDL program provides low-interest, fixed-rate loans directly from the SBA that must be repaid. Businesses can also apply for the program’s Targeted EIDL Advance or Supplemental Targeted Advance, which is money from the SBA that does not need to be repaid.
Keep in mind, whether you are shooting for a first-time EIDL loan, an increase on an existing EIDL loan or a Targeted Advance, business owners must apply and be approved for an EIDL loan first and foremost as part of the process.
Nationwide, the SBA has approved approximately 3.85 million EIDL program loans for a total of around $308 billion as of Dec. 8. In California, the SBA has approved 583,620 EIDL loans worth about $55 billion in total, which is the largest total amount distributed to a state.
If business owners need help filling out the online application or have concerns about language or technology barriers, the San Diego and Imperial Valley Small Business Development Center (SBDC) offers no-cost assistance.
Recently, the SBDC hosted a webinar that discussed the EIDL loan program with a panel of six community lenders and what small business owners need to know about connecting with capital in the new year. Here are three takeaways from local community lenders on how small businesses can prepare for 2022:
Have a plan to take care of your grants and loans
Lenders say it’s best to not only have your finances in order when you approach a financial institution, but you need to be ready to explain how the pandemic may have impacted your finances.
“When you come in to speak with a banker, myself or any lender, have your income, your tax documentations ready and know what they mean,” said Roxanne Rostamian, branch manager at Banner Bank in Escondido. “So, if you did take losses and it was COVID related, be able to explain that and how things are going to be different moving forward.”
Figure out how to keep capital on hand to be ready for opportunity
In addition to making sure your finances are sorted out going into the new year, lenders say it’s best to keep cash on hand to be ready for opportunity. Fernando Ponce, regional business development officer at Primary Funding Corporation said he noticed that the businesses that were ready to reach out and access capital early in the pandemic had the ability to thrive.
“Having the ability to leverage capital is going to be very important,” he said. “You should prepare and be ready so that if there is an opportunity you can take it…It may be a month from now, it may be a year from now, but when that opportunity comes you want to be ready to pounce on it and not scramble to try and get everything ready and in place to take advantage.”
Talk to your CPA about taxes — especially if you plan on applying for a loan in 2022
A common thread of advice was for business owners to plan ahead with their finances and their goals for the new year.
“It’s a really important time right now because a lot of people are going to be doing their taxes and how you file your taxes as a business owner will either provide cash-flow for a loan or not. I’m not a CPA so my advice is talk to your CPA,” said Miriam Torres Baltys, a loan officer with the CDC Small Business Finance.