In a word, what describes what small businesses face in the Coronavirus pandemic? Uncertainty. A July 2020 survey from the U.S. Chamber of Commerce shows a majority of small businesses that closed in the spring when COVID hit have reopened. Yet, a majority worry about financial hardships or even going out of business.  The varying government responses throughout the country exacerbate the situation. Despite the current conditions, small businesses have resources at their disposal. One way for small businesses to mitigate the financial uncertainty and anxiety is to obtain a small business loan.  

Things to Know Before Applying

  1. Know what you need a loan for: Is it to meet payroll? To pay rent? To remodel outdated equipment? To increase inventory ahead of season? Whatever the reason or reasons, a lender will require a borrower to specify where the money will be applied. 
  2. Credit Score: Consumers are entitled to one free credit report per year. Visit, the only website authorized by the Federal Trade Commission for free reports. The higher the credit score, the more lender choices available and at better rates. For those with credit scores below 680, defined as subprime borrowers, getting loans at traditional institutions are almost impossible.  
  3. Determine time in business and revenue: Lenders will have minimum requirements. The requirements vary, but traditional banks have more stringent ones. 

Steps to Getting a Small Business Loan

  1. Gather required documents needed for fundingHaving these documents accessible when applying will expedite lender approval and will determine the loan terms and amount.
  • Social Security number or Tax ID
  • Business licenses and filings
  • Tax filings
  • Profit/loss statement, balance sheet, bank statements
  • Review individual lender for additional documents
  1. Understand Different Small Business Funding Options 

Traditional Bank Loans: These loans usually provide a fixed amount that the borrower must pay back in monthly increments. The most common loan for an existing business is a line of credit, in which the borrower has access to funds from the lender. These loans have lower interest rates than non-traditional but require higher credit scores.

Revolving Lines of Credit: A revolving line of credit allows a borrower to borrow up to the credit limit like a regular line of credit, but the key difference is, the credit limit returns or revolves back to its original amount once a borrower pays back borrowed money. A credit card is the most common form, but credit cards are advisable for only small purchases. Other forms of revolving credit will be better options for large needs. 

SBA Loan: These are loans from the federal agency the Small Business Administration. The SBA doesn’t directly issue loans but minimizes the risk to private lenders who administer them. 

Congress, in response to the economic shutdown in the spring, passed the CARES Act, which infused money into the SBA. The SBA offered the Paycheck Protection Program (The program ended on Aug. 8), which provided billions to small businesses. These forgivable loans were designed to keep employees on the payroll of shuttered businesses. Many members of Congress have called for the restart of PPP, but fierce political divisions have prevented new funding legislation. Negotiations in Washington continue. 

Another portion of the CARES ACT authorized the Economic Injury Disaster Loan Program. The SBA provides up to $2 million in EDIL loans and forgives up to $10,000. They are intended for fixed debt like a mortgage or rent and business expenses like payroll. These loans are offered at 3.75% to qualified applicants. 

Aside from the CARES Act, the SBA offers several different types of its 7(a) loans. Applicants rejected by traditional banks may qualify for one of these loans. Borrowers can benefit from the lower interest rates the SBA offers, but the application process can be onerous. 

  1. Apply

With your research complete, and information and documents in hand, a small business can take the steps needed to keep it going during this time of uncertainty. Business experts advise to not wait until the aid is desperately needed. Applying and being approved will provide access to what may be vital funding. 

Still not sure which small business loan works for you? Complete a 1-minute application with and speak with an advisor. 

Apply Now to get started!