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How to Get Government Help for Your Small Business

Some agencies are offering affordable loans, grants to entrepreneurs

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Asia Mei stands in her empty restaurant in Boston, Massachusetts, which has been shut down due to COVID-19.
John Tlumacki/The Boston Globe via Getty Images

Small and midsize businesses need money from time to time, whether it's to get started, expand or stay open. In the wake of the COVID-19 shutdowns, so much of the attention went to the Paycheck Protection Program (PPP) and Economic Injury Disaster loans (EIDLs) that some entrepreneurs might have overlooked the resources that are available through federal, state and local governments.

There are many types of assistance programs and they vary depending on where your business is located, says Lenin Agudo, director of Widener University's Small Business Development Center (SBDC) in Chester, Pennsylvania. Understanding the types of programs, where to find lenders and how to access them can help you unlock a variety of resources beyond the stimulus programs.

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Small Business Administration loans

For-profit companies that do business in the United States can get loans for up to $5.5 million through a variety of programs run by the Small Business Administration (SBA), the federal agency dedicated to helping entrepreneurs. These loans are obtained through an approved SBA lender, Agudo says. SBA programs typically require that you've been in business for at least two years and have invested in your business's equity. Some may require that you have exhausted other funding options first. Your bank can give you specifics on the criteria for each loan and which program is right for your business.

"It's better to have an existing relationship with a bank” if you're seeking an SBA loan, Agudo says. If your regular bank is an SBA-approved lender, start there. They have familiarity with your business and may be able to guide you to the best programs, which may include:

  • 7(a) loans: The SBA's marquee program, there are several types of 7(a) loans and thresholds for some extend to a $5 million maximum. The program's Express loans are designed to facilitate decisions within 36 hours of application on loans of up to $350,000. In each case, the SBA guarantees a portion of the loan, which may make it easier for borrowers with limited or less-than-stellar credit to qualify. But you must still be able to make a good case for your ability to repay.
  • Veterans Advantage: This program provides loans to businesses that are at least 51 percent owned by a U.S. military veteran who meets criteria such as having been honorably discharged, being a service-disabled veteran, or being an Army or National Guard reservist, among others.
  • CAPLines: This SBA program helps businesses with short-term working capital needs and includes specific programs for general contractors, seasonal businesses, subcontractors in various fields, and businesses with poor credit.
  • SBA Express Bridge Loans: If you already have a relationship with an approved SBA Express lender, you may be able to get up to $25,000 within days. If you have an urgent need for cash in a federally declared disaster area and you're waiting for an Economic Injury Disaster Loan, the SBA also offers Express Disaster Bridge Loans that might be an option.
  • 504 loans: If your business is in an underserved community and your business will contribute to economic expansion, this loan program may be an option. The 504 loan is administered through designated Certified Development Companies (CDCs), which are nonprofit economic development corporations the SBA regulates. The loans are typically structured so that the bank extends a portion of the loan, the SBA underwrites a portion of the loan, and the borrower contributes 10 to 20 percent of project costs, depending on the circumstances.
  • Debt relief options: For existing SBA loan borrowers who are experiencing financial hardship related to the COVID-19 pandemic, the CARES Act extends additional protections in the form of loan relief. The SBA will pay six months of principal, interest and fees that borrowers owe for existing 7(a), 504, and microloans, as well as new loans in these categories disbursed before Sept. 27, 2020. Borrowers do not need to request the relief, although it's a good idea to touch base with your banker to ensure that there are no delays or other issues. This relief does not apply to PPP loans or EIDLs.

Government grants

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Other federal agencies also offer help for small businesses. Finding those that are right for and open to your small business may feel like looking for a needle in a haystack. But it may be worth your time, Agudo says. “It's important that entrepreneurs are asking actively, ‘How can I apply? What are the application guidelines?’ [as they search]. This should be a very public,” he says. Some places to get started include:

State and regional economic development authorities

States, regions, and counties — especially their economic development authorities — are also places to look for funding options, Agudo says. Such programs may change depending on the priorities of the administration in charge, but it's a good idea to stay informed about new programs they may be launching. For example, in late May, New York Gov. Andrew Cuomo (D) announced the New York Forward loan fund, which targets small businesses with 20 or fewer full-time employees.

Other types of help

The government may also be a good resource to help you find and apply for these loan and grant program. SBDCs are important information resources and may be able to help you find various programs. Your local SBDC may also be a good resource to find out about state and regional economic development programs that can benefit your business.

In addition, SCORE — the Service Corps of Retired Executives — is a nonprofit that provides free mentors and advisors to small businesses. If your lender requires that you submit a business plan or if you're looking for ways to get started in potentially lucrative segments like exporting or government contracting, your local SBDC or SCORE chapter may be able to connect you with people and resources that can help.

While few loans come directly from the government, there are often innovative and business-friendly programs at every level. Find an approved lender and explore your options depending on your business goals. You may find that Uncle Sam or your state government has just the answer you need to get the funding for your company, both during the COVID-19 era and afterward.

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