SBA Loans and Coronavirus (COVID-19): Help for Small Businesses Now

Coronavirus (COVID-19) is hurting small businesses across the country. If your small biz is in trouble, here’s how to get help.

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Updated May 13, 2024
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Running a small business can be rewarding, but it can also be challenging even in the best of times. With the uncertainty surrounding the coronavirus (the virus that causes COVID-19), many small business owners are seeing a downturn.

The good news is, if you're worried about your business and wondering how to get a loan, there are many sources of help available to you. These include Economic Injury Disaster Loans (EDIL loans) from the Small Business Administration as well as a number of new programs created by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) such as the Paycheck Protection Program (PPP).

In this article

How SBA loans work

As their name suggests, SBA loans are loans guaranteed by the U.S. Small Business Administration. However, the SBA doesn't actually lend money. Instead, they work with a network of lenders who provide loans to small businesses.

The SBA offsets some of the risk for lenders, making it easier for small businesses to access capital. Because SBA guarantees the loans, the interest rates are usually competitive. Along with providing much-needed capital, some SBA loans also come with counseling and other types of support to help you sustain your business.

And, in the case of businesses impacted by COVID-19, the government is even providing funding to repay some of these loans so businesses don't have to — as long as the borrowed money is used for eligible purposes. Keep reading to find out more about these new programs and if your business qualifies.

You can also click here to compare loans and get prequalified

SBA loans, coronavirus (COVID-19), and the CARES Act

The CARES Act is a $2 trillion federal stimulus package passed to help small business owners and individuals. It has expanded the loans offered by the SBA to include new relief programs. It has also made SBA loans easier to qualify for; provided some funding so loans can be forgiven if used for specific purposes; and made some SBA funding available to independent contractors and self-employed individuals who might not otherwise be eligible.

Paycheck Protection Program

The Paycheck Protection Program is one of the SBA's new loan programs created in response to COVID-19. It's designed to encourage small businesses to keep paying their staff members during the coronavirus crisis. Businesses can borrow up to 250% of their average monthly payroll costs with a maximum loan amount of $10 million.

The loan will be fully forgiven for companies that keep their workers employed for eight weeks as long as the funds from the loan are used to cover eligible expenses including payroll costs as well as rent, mortgage interest, and utilities. However, at least 75% of the money must be used for payroll to qualify for forgiveness, and the amount forgiven will be reduced if the number of full-time employees declines or if employee wages are decreased. Payroll costs are also capped at $100,000 on an annualized basis for each eligible employee.

You are eligible to apply for this loan beginning April 3 for small businesses and April 10 for sole proprietors, independent contractors, and the self-employed. You must meet certain requirements, including the following:

  • You have fewer than 500 employees
  • You are a company, sole proprietor, independent contractor, nonprofit, or self-employed
  • You provide certification that current economic conditions have affected your ability to maintain ongoing operations

You can apply with any SBA lender (you can find one on the SBA's website) and will need to provide:

  • A good faith certification
  • Documentation of covered expenses including payroll documentation
  • Your business name
  • Your company's EIN or your Social Security number

No payments are required on these loans for at least six months and there are no fees for applying. You will also need to apply for loan forgiveness if you're eligible. For any funds not forgiven that you must repay over time, the interest rate on the loan is 1%.

EIDL loans and loan advances

The SBA is currently offering low-interest disaster loans for small businesses suffering substantial economic losses as a result of the coronavirus. These loans, known as an Economic Injury Disaster Loan (EIDL), can be used to pay fixed debts, and cover payroll costs, accounts payable, and other bills. Non-profits and individuals may also be eligible. If you qualify for a disaster relief loan, you can apply online, by mail, or in person.

Because businesses need funds right away, the SBA is also providing an advance on disaster loan funding. If your business is struggling during the coronavirus crisis, you can receive up to $10,000 in advance funding from an EIDL loan. This money does not have to be repaid if used for qualifying purposes. Advanced funds can be used to pay for:

  • Paid sick leave
  • Materials
  • Rent or mortgage costs (as long as you are not paying for it with PPP funds)
  • Payroll (as long as you are not paying for it with PPP funds)
  • Repayment of obligations you can't otherwise pay due to loss of revenue

You can apply for an EIDL for up to $2 million at the same time you apply for this $10,000 advance. You are eligible for both the advance and a low-interest disaster loan if:

  • You have fewer than 500 employees
  • You are a sole proprietor, independent contractor, company, or private non-profit

There is a streamlined application process and you can apply online. You will need to provide some basic details including:

  • Information about the type of business you have
  • Your company's legal name
  • The EIN for the business or the Social Security number of a sole proprietor
  • Gross revenue for the 12 months prior to the date of the disaster
  • Cost of goods sold for the 12 months leading up to the disaster
  • Operating expenses for the cost of goods sold prior to the disaster

If you have a specific type of business, you may need to provide additional information. For example, real estate investors need to provide details on lost rents and faith-based entities need to include details on secular services they provide.

You can apply for this loan in addition to the Paycheck Protection Program (PPP) as long as you don't use the money for the same expenses. The $10,000 advanced funds should be available within days of the time you apply.

SBA Express bridge loans

If you already have an existing relationship with an SBA Express Lender, you can apply for a bridge loan to obtain up to $25,000 in funding very quickly. This money can help keep your company going while you wait for your EIDL advance or PPP funds to come.

Loans are available to any business across the country and must meet certain eligibility requirements including:

  • Being operational when the declared disaster commenced
  • Having 500 or fewer employees
  • Participating in the SBA Express program at the time of the disaster
  • Meeting minimum credit score requirements including providing a personal credit score for the guarantor of each loan

To apply, you'll need to contact the lender you have an existing relationship with. You will need to provide a signed IRS Form 4506-T and an IRS tax transcript. If you subsequently qualify for the EDIL advance, the money will be used to fully or partially repay the Bridge Loan.

SBA debt relief

SBA debt relief is available to small businesses with existing SBA loans If you have a 7(a) loan; 504 loan, or microloan, you are eligible for this help.

Under the debt relief program, the SBA will automatically pay principal, interest, and fees on your loan for six months. And if you have an existing SBA disaster loan, payments will be deferred until December 31, 2020, although interest will continue to accrue.

Automatic payments will continue to be processed, though, so you should cancel the payment if you want to take advantage of the deferment.

How to get an SBA loan for your business

You could be eligible for an SBA loan, even outside of emergencies, if you own a for-profit business that operates in the U.S. You'll need to have invested your own time or money into the business and exhausted other financing options.

SBA loans range from $500 to $5.5 million and can be used for a variety of business expenses. Loans can be used to cover working capital (revolving credit, loans, seasonal financing, etc.) and fixed assets (equipment, furniture, real estate, etc.).

Carefully review the terms of each lender for specific eligibility requirements and restrictions.

Compare loans and get prequalified

FAQs on SBA loans and the coronavirus

What is the SBA?

SBA is an abbreviation for the U.S. Small Business Administration. The SBA is a federal agency that was created in 1953 with a mission to help small businesses. It provides financial assistance, including SBA loans, as well as counseling and other types of support to small businesses.

Can I get an SBA loan if my business is affected by the coronavirus?

The Small Business Administration is offering several different types of loans for companies affected by the coronavirus. You can apply for a loan through the Paycheck Protection Program (PPP) and borrow up to 250% of average monthly payroll costs up to $10 million. You can also apply for an economic injury disaster loan and borrow up to $2 million.

Up to a $10,000 advance on an Economic Injury Disaster Loan (EIDL) is available to eligible businesses. This does not have to be paid back if the funds are used for qualifying purposes such as material costs, rent, and payroll expenses. And if you retain employees for eight weeks and do not reduce payroll, your PPP loan can also be fully forgiven as long as 75% or more of the money was used to pay your employees.

Does my business qualify as "small" for an SBA loan?

The Small Business Administration defines "small" based on revenue and number of employees. The exact numbers to qualify as a small business vary by industry. You can use the SBA's size standards tool to see if you qualify.

Can I get one of these new SBA loans and also get unemployment?

If you receive an SBA loan to cover business expenses only, you may still need to claim unemployment for personal expenses. However, if you use the SBA funds to continue paying payroll and operating your business, you likely will not meet the definition of unemployed under your state's regulations. You'll need to see if you can qualify for unemployment benefits under your state's rules.

I am an independent contractor with no employees. Does my salary count as covered payroll for purposes of getting a PPP loan?

Independent contractors can apply for a PPP loan. Your loan can be used to cover:

  • Wages
  • Commissions
  • Income or net earnings from self-employment

The amount you can obtain is capped at $100,000 on an annualized basis. If at least 75% of borrowed money is used to cover these costs and you don't reduce payroll for eight weeks, you will not need to pay back the PPP funds.

What is included in payroll expenses for purposes of the PPP loans?

For purposes of a PPP loan, payroll expenses include:

  • Salary, wages, commissions, and tips up to $100,000 per employee on an annualized basis.
  • Employee benefits including parental leave; sick leave; family leave; medical leave; vacation pay; and healthcare benefits including insurance premiums
  • State and local taxes on compensation
  • Payment of employee retirement benefits
  • Allowances for separation or dismissal

Can I get an Economic Injury Disaster Loan (EIDL) and a Paycheck Protection Program Loan (PPP)?

You can receive both an EDIL loan and a Paycheck Protection Program loan but the money can't be used for the same purpose.

If you need money faster

If you can't wait to be approved for an SBA loan, a business credit card that offers an intro 0% APR on purchases for a year or more could help you cover expenses in the short term. During the intro period, you won't pay interest, but be sure to pay off your balance before the intro period ends or interest can build up.

A good option is the Ink Business Cash® Credit Card which offers a 0% intro APR for the first 12 months on purchases (then 18.49% - 24.49% Variable). 

In addition to giving you a full year to pay down your balance without paying interest charges, the Ink Business Cash card has a $0 annual fee and offers 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year; 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year; and 1% cash back on all other purchases. 

New cardmembers can also take advantage of the card's valuable sign-up bonus — Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening.

Up to 5% Cash Back


Ink Business Cash® Credit Card

Current Offer

Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening

Annual Fee


Rewards Rate

5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year; 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year; and 1% cash back on all other purchases

Benefits and Drawbacks
Card Details

Author Details

Christy Rakoczy

Christy Rakoczy has a Juris Doctorate from UCLA Law School with a focus in Business Law, and a Certificate in Business Marketing with an English Degree from The University of Rochester. As a full-time personal finance writer, she writes about all things money-related but her special areas of focus are credit cards, personal loans, student loans, mortgages, smart debt payoff strategies, and retirement and Social Security. Her work has been featured by USA Today, MSN Money, CNN Money and more, and you can learn more at her LinkedIn profile.