The coronavirus has been ravaging small businesses across America as we are all forced to deal with restrictions, closures, and customer uncertainty. Many of our clients have been forced to lay off staff and dip heavily into their cash reserves.
At Franchise Marketing Systems, we've compiled a list of several resources that our clients can use to help them get through this difficult period, including some specifics from the Stimulus plan that was passed through Congress yesterday.
SBA Disaster Relief: All small businesses and franchises are eligible to apply for an SBA disaster loan. You can apply online here. These loans can be as high as $2 million and are low interest (3.75%) and payable with terms as long as 30 years. With these loans, you submit all of your business and personal financial information and the SBA will determine how much you qualify for. Nowhere in the process do you request a certain amount for the loan.
From our clients that have already applied, it is highly advisable that you apply online. Submitting paper applications often leads to longer response times.
CARES Small Business Loans: The framework of these loans is still being finalized but this is the only money that could ultimately become "FREE" money, meaning it converts to a grant. You apply for these loans through your local bank that can process SBA loans. Loans are capped at 2.5x your monthly payroll expenses.
Any of this money that is used for the purposes of maintaining payroll, keeping workers on the books, paying rent, mortgage, utilities, or existing debt can be forgiven so long as it is used in the first 8 weeks from your loan origination date and your workers remain employed through the end of June.
You can also qualify for an Emergency Grant which is $10,000 to be funded within three days of your application. This money is an advance on the money that you will receive through your total loan.
State and City Bridge Loans: Certain states and cities have enacted bridge loans to help with cash flow shortages until the SBA loans are funded. For example, Florida businesses are able to apply for the Florida Small Business Emergency Bridge Loan Program which is designed to quickly fund up to $50K at no interest for 12 months. These loans are assumed to be paid back when you receive the larger SBA loans. If the loans are not paid in full at the end of 1 year, they convert to 12% interest.
Unemployment: A major change with the stimulus plan is the increase in unemployment coverage. Unemployment insurance is now extended to independent contractors, self-employed, and gig workers. Unemployment coverage is extended 13 weeks beyond your state's maximum (up to 39 weeks) and the maximum benefit is increased by $600/wk. The increased benefits will be for a period of 4 months, ending at the end of July. You typically apply for unemployment online or through your state's unemployment office.
We have been through similar situations during the financial crisis of 2008 and 2009 and it is known that franchising experiences a MASSIVE boom after periods of recession. Many people who lose their jobs are looking for a new career and many want to be their own boss. This is the ideal candidate for franchising.
In addition, real estate and human capital will become abundantly available as the market comes back to life after this pandemic is addressed. You will want to make sure you are ready to capitalize on the rainbow after the storm.
For more information on the coronavirus stimulus program for franchises, feel free to contact us.