Chad Morris
By: chadmorris
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What Happens if you Don’t Qualify for an SBA Coronavirus Loan?

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The Small Business Administration (SBA) has an Economic Injury Disaster Loan program. It offers loans to help small businesses make it through economic crises, such as the one currently being caused by Coronavirus. Although an SBA loan may sound enticing, many business owners may not qualify for these government programs.

More Small Businesses Seeking Temporary Funding

As the United States looks headed into a recession because of COVID-19, the country’s 30 million small businesses are increasingly turning to short-term financing programs. These services can help the nation’s small businesses survive and emerge stronger from the recession.

In particular, small businesses will need loans to cover cash-flow needs during the economic crisis. A loan can cover a wide variety of expenses during difficult times, including employee salaries, rent, utilities, commercial vehicle expenses, and accounts payable.

A small business can navigate through the economic downturn without failing to meet any of its financial responsibilities. And while SBA loans are probably the best option for small business owners, you need to make sure you can apply for one.

Details of the SBA’s Loan Program

Thanks to the funds provided by the CARES Act, the government is able to offer several funding programs. The two most important ones are:

Economic Injury Disaster Loans (EIDL)

This is an emergency disaster loan program. Its funds ($10 billion total) will be deployed directly by the SBA.

Paycheck Protection Program (PPP)

This program is an expansion of the already existing SBA 7(a) loan program. The funds (that amass to $349 billion) will be dispersed, primarily, via banks, credit unions, and other SBA certified lenders.

Each program has its own requirements, of course, but the most basic one is that your business needs to be:

  • Considered a small business (you need to either have less than 500 employees or considered one under the NAICS code employee size standard)
  • Be a small business or sole proprietorship with or without employees
  • Be an independent contractor
  • Be a cooperative or employee-owned business
  • Be a private non-profit
  • Be a small tribal business

If you want to learn more about the CARES Act programs, read our article: COVID-19 small business Relief Programs.

The EIDL and PPP Programs: Do They Have Any Downsides?

While these Business Relief programs are your best option (and we wholeheartedly recommend you to apply for one), many business owners might not be able to apply for one, or won’t have their application accepted because the government’s coronavirus loan program has stringent requirements.

One downside of the SBA’s coronavirus loan program is that you can’t apply with only an Individual Taxpayer Identification Number (ITIN). To qualify for an SBA loan, you need to have a Social Security Number.

By contrast, Camino Financial can accept applicants that only have an ITIN.  This means you can apply for a loan at Camino Financial with no Social Security Number. This is a significant advantage that Camino Financial has.

Once the SBA receives an Economic Injury Disaster Loan application from a small business, it can take up to 2 to 3 weeks to make a credit decision. If you do are accepted to enter one of these programs and receive a Relief Loan, there might be another issue: more time could be required to release funds. 

On average, it takes the Small Business Administration around 15 to 30 days to release funds once an application has been approved. With an application time of 2 to 3 weeks, the total amount of time from application to receipt of funds could be a month and a half.

Now, this is not a complete disadvantage, as you could use a bridge loan to get the funds you need very fast.

Funds from a loan with Camino Financial are released in just a few days, which means you can use one of our loans as a bridge loan. In some cases, it could take only 2 days to receive funds.

Reasons Small Businesses Choose Camino Financial

If you need a bridge loan, or if you weren’t able to fulfill the SBA’s requirements, don’t worry, we’re here for you. Here are some of our advantages:

  • Our members are people, not numbers. We like to build business partnerships with our clients over the long-term. We don’t look at our customers as numbers. We understand their financial needs and help them achieve their goals. Our bilingual customer service is always ready to help in any way they can.
  • No collateral required. Small business loans from Camino Financial are unsecured. This means you don’t need to have any collateral. By contrast, some loans from the SBA do require collateral.
  • Opportunity to graduate. After making regular payments for just 9 months, borrowers at Camino Financial are able to graduate to a lower interest rate and larger loan amount.
  • Continuing education. Camino Financial offers resources, tools, and other materials to help our clients improve their financial performance and manage their money better. You can start using our online loan calculator to determine the exact monthly payment for a loan based on the payment terms, monthly interest rates, and the amount of the loan.
  • Fewer requirements and restrictions. Compared to the SBA and other lenders, Camino Financial has less red tape, less stringent requirements, and fewer restrictions.

Don’t Let the Crisis Wreck Havoc on Your Business

Camino Financial’s motto is “No business left behind.” And we do mean that in any situation. With our fast and easy application process, your small business can get the support it needs in a matter of days. With Camino Financial on your side, your business will be even stronger when the recession ends.

Apply today for a business loan with Camino and don’t let Coronavirus take control of your business.

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