Why real economic recovery begins with financial literacy
To update: On February 16, the SBA announced that due to budgetary constraints it will reduce the amount of the payment facilities for certain SBA loans from six months to three months.
the economic impact of Covid-19 was a shock to all entrepreneurs. And while some are overwhelmed by the new demand, others are battling closings and bankruptcies. If there is one constant across all situations, it is the lack of knowledge about them Government programs to help on the spot.
Currently, most business owners focus solely on obtaining a Paycheck Protection Program (PPP) Loans, a forgivable loan aimed at keeping employees on the payroll. That’s not bad. Many entrepreneurs were able to save their businesses thanks to the funds they received through the PPP.
However, we have no idea whether this final lap will be the last.
The Main Street Lending Program, like PPP, was part of the Cares Act and helped many companies in need of larger loans. This program has already ended. Sure, the Economic Injury Disaster Loans (EIDL) existed before the Cares Act, but what if the government declares this national disaster over? EIDL will then no longer be an option.
These three types of loans have been crucial for business owners in this pandemic, but few, if any, are aware of the US Small Business Administration’s long-standing loan programs that may be even better suited to their needs. The SBA’s 7 (a) and 504 loan programs are specifically designed to encourage banks to lend to small businesses that are riskier bets than larger bets before the pandemic, as few tend to take it by the fourth Year to create.
The benefits of loan programs 7 (a) and 504 include more capital to expand into new facilities or increase your market presence. You can also hire more people and buy the equipment you need – all with government support.
The reason to join now is even more acute. Starting February 1 and through September (or until funds are depleted), the latest $ 900 billion stimulus package sweetened these SBA programs. Now they come with no fees, six months of payment waiver, up to $ 9,000 per month, and a 90 percent higher guarantee compared to 75 percent and 85 percent earlier. Its purpose is to encourage banks to lend more. Of course, banks will no longer be as motivated to provide SBA-covered loans if the guarantee percentages drop again.
SBA-covered loans aren’t just for businesses that need capital to survive; they are also intended for companies that want to do more than just survive. Some of you may be thinking, “Why should I get a loan when my business can survive without it?” The answer is simple. Survival is not the same as thriving. If 2020 has taught us anything, it is to be prepared for the unexpected. Some businesses had to close their doors immediately and did not have enough reserves to cope with the additional economic pressures. Still others saw an increase in the demand for their goods or services and did not have the capital or resources to meet that demand. Both types of businesses would have benefited greatly from already having an SBA loan.
Even if your company has no problems keeping the lights on right now, it might be the perfect time to apply. You could still use money to fund your growth. If more small business owners knew exactly how the SBA could help them thrive, the economy as a whole could benefit. The reason be much of the country’s job growth will need In the months ahead, businesses will come that have stayed flat or grown during this period – and they will need money to hire a likely surge of new workers.
As soon as the dust settles on this pandemic and people are back to work, some companies and with them some jobs will disappear forever. These workers need to find new homes. If we can educate small business owners about the benefits of an SBA backed loan for growth, we can also help create hundreds of thousands of jobs in the years to come.
Our goal of training one million entrepreneurs on the SBA programs this calendar year will not be easy as we are a small company and we cannot do this on our own. We will seek to build a coalition of partners to market these efforts and bring the convenience of knowledge to small business owners during these troubled times.