Pandemic has hit all the businesses in the United States. Small businesses are trying to find ways to raise capital to pay expenses and to maintain the cash flow. Options for quick and easy small business funds are in the market due to CARES, Coronavirus Aid, Relief, and Economic Security Act. This act was passed by Congress and signed by President Trump to battle the economic problems which occurred due to pandemic. This act encourages the company to apply for two funds, the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL). The US Small Business Administration (SBA) offers these economic fund programs.
These funds help with various expenses such as rent, payment of the employees, etc. both the funds that the SBA allows are interest loans. Availability of these funds does not take away the burden of the company. The question of approval of the loan despite a poor credit score or a pending bankruptcy is a huge concern. This concern arises because of the history of SBA having tough standards to qualify for. But amid Covid-19, these laws have been loosened for the development of the economy of the US. Usually, SBA small business funds make a big deal out of a company’s credit score. Covid-19 fund assistance programs do not make a fuss about the credit score or the history or probability of bankruptcy.
Economic Injury Disaster Loans (EIDL)
In this type, a credit score is considered to determine the size of the loan you want. The better your credit score is, the more amount will be granted under EIDL. This provision is under new guidelines and a $10,000 grant program set up by the CARES Act. A bad credit score will not be an obstacle to apply for this fund. The new guidelines make SBA adaptable and do not mind giving you funds despite your history of bankruptcy. This is because quick and easy small business funds like this not only support the business but also are beneficial for the well-being of the employees who are dependent on the wages. Hence, the government is assessing giving relief funds to as many businesses as possible. Without expecting any refund in some cases.
Paycheck Protection Program loans (PPP)
This type of fund is given to the people on a first-come, first-serve basis. It is given with an interest rate of 1.0%. Financial institutions participating in the SBA loan program are supposed to follow the general trend. They are not needed to consider the loans in the direct order of the receipt of applications. PPP loans do not emphasize the maintained credit score to enable a business to take funds. you will have to expect less funding if you have a stellar credit history. You may not have to repay this fund if you use 75% of the fund for payroll expenses. Usage of the other 25% can be according to SBA and your loan provider. If you fail to follow the guidelines, then your business will be held accountable for the fund and may incur penalties.
At Flexibility Capital, we give easy loans to small businesses. Now, even if you have bad credit, we can get you the right needed funds for your businesses. We wish that no businesses put a pause on their growth plans because of a lack of funds. That is what we do, provide funds to support your growth. With professional financial consultation and customer-centric funding solutions, Flexibility Capital is the right choice.