A set of free Quick Guides to apply for a loan to the SBA Disaster Assistance Loan program are available for:
- Single Owner Businesses (sole proprietorships and single member LLC’s)
- Multiple Owner Businesses (multi-member LLC’s, partnerships, corporations, etc.)
A copy of these Quick Guides can be downloaded at: http://www.capitalinnovation.institute/pandemic
The first in a series of government disaster relief programs is the SBA Disaster Assistance Loan program which is intended to ‘meet working capital needs through the recovery period”. A small business may borrow up to $2 million at 3.75% interest for up to 30 years. https://disasterloan.sba.gov/ela
While the peak of the Corona (COVID) Pandemic has yet to be reached, the economic fallout from mass shutdowns of businesses everywhere promises an economic disaster that cannot be fully appreciated at this time.
Particularly hard hit will be small businesses that operate with minimal cash reserves that cannot afford the loss of revenue caused by the Pandemic. Time in accessing immediate funding is critical to achieving mitigation of small business failure. Analysis of post-disaster damage and disruptive impacts on the operating status of small businesses after Hurricane Katrina https://app.box.com/s/a88lmxnzedr9t3nx1p8ji64itep4joms
Many small business experts recommend that a small business should obtain as much money as possible as soon as possible from all possible sources. This means applying for all sources of funding: equity, debt, grants, etc. If a business obtains money and later determines that it does not need it, the small business may pay it back as soon as possible. The general rule of thumb is “It is better to have more money than you need than to need it and not have it.” As a small business, to survive, it must still be in operation when the COVID-19 Pandemic ends.
A small business needs a survival plan to maintain operations during the COVID Pandemic. The capital component of this plan will include:
- Reducing resource requirements as much as possible
- Obtaining new resources
A key to survival is to obtain money and other capital resources to sustain business operations.
Picture yourself stranded on the roof of a house in a flooded area. You need enough food and water to wait until the flood waters recede. You need to ‘hang on’ long enough for the threat to pass.
A small business needs:
- Money to pay ordinary expenses
- Money to pay for extraordinary expenses
- Money to pay for unknown / unanticipated expenses
A small business should obtain as much capital as is needed to attain financial breakeven to pay up to 100% of the costs of its operation (including the cost of interest and of raising money).
Karl Dakin, Executive Director
Capital Innovation & Technology Institute LLC
Published on LinkedIn 3 26 2020