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What Small Businesses Need to Know About the Coronavirus Relief Bill

Posted by Early Growth

March 26, 2020    |     6-minute read (1079 words)

What started with Wuhan in China has the world under its grip now. Coronavirus (COVID- 19) is everywhere. It has torpedoed our world in every conceivable way. The nature of the virus mandates social distancing as the only way to control the spread. With more and more states in the US adopting lockdown as a major strategy to contain the virus, only essential commodities are being allowed to operate. This has impacted the economies world over like never before with small businesses bearing the major brunt of the adverse economic impact. 

There are about 30 million small businesses in the US that are a critical part of the robust economy of the country. Such businesses mainly operate on the revenue from their regular customers to sustain themselves. Most of these businesses are already seeing a drastic drop in their income due to the various restrictions imposed on the movements of goods and services. 

How are small businesses getting affected by Coronavirus 

With the Coronavirus forcing the states to take tough measures like closing business establishments, small businesses have suddenly been faced with a plethora of issues that are proving a hindrance in running their business smoothly:

  • Administrative Restrictions: The lockdown implemented by a few states coupled with social distancing being practiced by the people has created a situation where most small businesses are not accessible to their customers. The fear of exposure to the virus in crowded places has led to people severely curtailing their public interaction including not patronizing the shops that they so love. 
  • Compromised financial capacity- The Coronavirus pandemic has led to a compromised financial capacity where the small businesses are finding it difficult to maintain inventory, manage payrolls and respond to supply and demand fluctuation in the market. Consequently, they are finding it increasingly difficult to sustain themselves.  
  • Reduced workforce: With social distancing being the norm, small businesses have either laid off their staff or have given them work from home if possible. In both cases, optimal service efficiency and efficacy are greatly affected. 
  • Shortage in the supply chain: The fear of the spread of Coronavirus has led to drastic measures being taken by the government that has impacted the supply chain that the small businesses depend on for their smooth operations in the most unfavorable ways. They may not be able to secure an adequate buffer for their supplies as the entire supply chain gets affected due to the Coronavirus outbreak. 

SBA Disaster Assistance 

Small Business Administration (SBA) is an agency under the US government whose mandate is to support small businesses and enterprises. SBA provides loans via credit institutions like banks and credit unions at low-interest rates to be repaid over a substantial period of time.

The US government has taken steps towards supporting small businesses and enterprises from the unexpected impact of the Coronavirus outbreak. A financial relief package called the SBA Disaster Assistance in Response to the Coronavirus has been announced by President Donald Trump for small businesses and entrepreneurs. The objective of this loan is to help them overcome the economic damage and loss that they are undergoing due to the pandemic. 

  • Loan amount: The Economic Injury Disaster Loans of the SBA is offering loan assistance up to $2 million at an interest rate of 3.75% for a maximum of 30 years. 
  • Geographical eligibility:  All small business owners across the US are eligible to apply.
  • Things the loan can be utilized for: The loan can be utilized towards bills where the deadline can’t be honored due to the current health crises, accounts payable and payroll. 

Application Process

The applicants are encouraged to apply online for the disaster loan. To apply you would need to register and create a log-in. You would need to select “Economic Injury” as the reason for your requirement for assistance. Keep all your supporting documents like the personal financial statement, schedule of liabilities outlining all your current debts and the latest tax return statement. You would need to upload them as a part of your loan assistance application. Once you are registered all you need to do is follow the instructions and fill in your small business information in the system. The applicants can also reach out to their SBA district office and Small Business Development Centre. 

Benefits and Drawbacks under the SBA Disaster Assistance 

The US government is making all possible efforts so that the small businesses are able to function in such challenging times as these. If you run a small business enterprise and have faced a steep downward drop in your profits and have to make some hard decisions to keep your business going, check out the SBA Disaster Assistance in Response to the Coronavirus. The relief package comes with many benefits that are designed keeping in mind the economic ramifications of the Coronavirus on the small businesses. However, like any relief plan, this has its own drawbacks. 


  • Targeted long term loan at affordable interest rates: The interest rate under the relief package is as low as 3.75%. This low-interest rate coupled with a long term re-payment plan up to a maximum of 30 yrs makes it very attractive. 
  • Eligible for other loans under SBA: Applications for other traditional loans under SBA are also open for small businesses should they wish to apply under this category as well.

  • Long process: The process is a long one with SBA coordinating with the respective state Governors for loan assistance. The loan is routed through lending partners like banks and credit unions adding to the delay in the final loan approval.  
  • Stringent credit qualification: You qualify for the credit under this disaster relief package only if you are unable to secure credit somewhere else.  
It would not be wrong to say that small businesses provide strength and vitality to the US economy. With more than 40% of the economic activity being contributed by small businesses, they are the life and blood of the country. SBA Disaster Assistance in Response to the Coronavirus (COVID-19) is indeed a great step to help small businesses and enterprises across the country. 

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