Towns, cities, and states are restricting gatherings and ordering the shut-down of a number of “non-life-sustaining” businesses. The restrictions on movement and operation have severely hit small businesses in Missouri and across the country. Many small business owners do not have the capital or savings to get through this with a near-total loss of income.
Even after shutting down and laying off employees, businesses may still need capital to cut final paychecks, pay rent, and keep the utilities running. Without immediate support, many small businesses will close up and may never reopen.
Small Business Administration Loan Relief
The U.S. Small Business Administration issued a press release in response to the President's announcement of providing support for small businesses. The SBA will work with state governors to “provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation.”
The disaster loans will be offered to designated states and territories. On March 18, 2020, Governor Mike Parson directed the Missouri State Emergency Management Agency and the Missouri Department of Economic Development to seek assistance for Missouri businesses through the SBA Economic Injury Disaster Loan program.
These loans will provide small businesses with working capital loans of up to $2 million. The loans are intended to provide economic support for the temporary loss of revenue related to COVID-19, and can be used towards fixed debt payments, payroll, accounts payable, and other bills.
The interest rate for small businesses will be 3.75% and 2.75% for non-profits. The loans allow for long-term repayment plans of up to 30 years to keep loan payments affordable, based on each borrower's individual situation.
Applying for SBA Coronavirus Disaster Loans
To apply for SBA disaster relief loans, visit SBA.gov/coronavirus. You can also get more information by contacting the SBA disaster assistance customer service center at 1-800-659-2955 or email [email protected].
Other Options for Financial Relief
Not all small businesses will be eligible for financial relief under the SBA's Coronavirus (COVID-19) Disaster Relief Lending. For some businesses, a loan will not solve their financial problems and others may not be eligible. Instead of tapping into personal savings, retirement savings, or crowdfunding for support, there may be other options to weather the coronavirus storm.
Bankruptcy may be a viable option for businesses in financial hardship. Businesses can liquidate assets and discharge debt under a Chapter 7 bankruptcy. Alternatively, with a Chapter 11 bankruptcy, businesses can reorganize while generally being allowed to continue operation and keep the business going after bankruptcy.
Other options for financial relief include debt negotiation, debt consolidation, loan modification, force majeure contract provisions, and payment plan negotiations. Talk to your Missouri lawyer about options for keeping your business going in these difficult times.
Virtual Capable Law Firm Serving Our Community
Our virtual capable law firm takes your health and safety seriously. We understand the need to support our local small businesses during these difficult times and will remain open to help you and your business. Our office is fully operational and our staff is safely working from the security of their homes. Contact the Joshua Wilson Law Firm today by calling (816) 331-9968 or fill out our online form.