As the owners of microbusinesses, and as makers, we’re used to creating great things with a patchwork of resources and materials. But during the economic slowdown prompted by the Coronavirus pandemic, so many of us have been put in a precarious situation, the income we’ve relied on from events evaporating with cancelations, and online sales drying up as our customers face their own difficulties.
In the last couple of weeks, emergency loans and grant opportunities have emerged to help small businesses cover losses specifically related to the COVID-19 crisis. Here’s a targeted list of loan and grant programs created with craft businesses in mind.
This Federal loan program is a direct loan through the SBA that provides working capital loans up to $2 million for business affected by the COVID-19 pandemic. The interest rate is 3.75%, and can be repaid over the long term, up to 30 years. The money can be used for “loan payments, payroll, rent, accounts payable and other bills that can’t be paid because of the disaster’s impact,” according to the SBA.
Effective with the passing of the CARES Act of 2020 that was signed by President Trump on Friday, March 27th, all businesses located in the United States are now eligible to apply. The bill also included an advance of $10,000 that will be funded within three days of application for the EIDL whether the disaster loan is approved or not. These advances don’t have to be repaid in most situations. The application is made online through the SBA’s portal. Generally, you will need to have the information regarding your income and expenses for 2019 including payroll for your business.
The Paycheck Protection Program offers small businesses a direct incentive to retain their workers during the crisis by offering loans up to $10 million for payroll and some other expenses. If all employees are kept on payroll for 8 weeks, the Small Business Administration will forgive the portion of the loan used for payroll, rent, mortgage interst, or utilities. Up to 100% of the loan is forgivable.
You can apply at any approved lending institution, such as your bank. Businesses with under 500 employees are eligible, include sole proprietors, independent contractors, and self-employed individuals. The covered period is February 15-June 30, 2020. The amount any small business is eligible to borrow is 250 percent of their average monthly payroll expenses, up to a total of $10 million.
The social media company recently announced that it is offering $100 million in cash grants and ad credits for up to 30,000 eligible small businesses. The application process is still under development and you can sign up for updates as they become available by clicking the above link. Companies don’t need to use Facebook advertising in order to qualify.
Accounting software QuickBooks has teamed up with crowdfunding site GoFundMe to offer matching grants through a Small Business Relief Fund, which both companies will be donating to directly, according to a news release announcing the campaign.
To qualify, businesses must create a fundraiser on the GoFundMe platform.
Government spending bill
The $2 trillion emergency coronavirus spending bill was signed into law on March 27 includes $350 billion in loans as part of what’s called the
Paycheck Protection Program for small businesses. These low-interest (under 4%) loans would cover an affected business’s salary, wages and benefits, according to published reports.
Traditional commercial loans
Some businesses with assets may be able to qualify for traditional bank loans. The congressional legislation also reportedly includes billions in additional small business loans that will be available from FDIC-insured institutions.
After receiving mixed reviews for its offsite ads program, which is mandatory for shops with $10,000 in sales or more, Etsy Chief Executive Officer Josh Silverman said in an open letter to sellers that it was investing $5 million in offsite ads credits at no cost to sellers. They’re also offering sellers a one-month grace period on outstanding bills.
Other educational resources
Packaging supplier EcoEnclose has put together a comprehensive collection of resources for small business owners weathering the COVID-19 crisis, a spreadsheet that lists a number of grant, loan and payment extension programs available in various states.
Our thanks to Roxann Burns for her help with the SBA and EIDL section of this article.
Lisa is a freelance journalist in the New York Metro area who specializes in home design, real estate and healthcare. When she’s not writing, or knitting shawls and sweaters, Lisa runs Indie Untangled (www.indieuntangled.com), a marketplace and blog that promotes the work of yarn dyers, pattern designers and crafters of knitting-related accessories.