The COVID pandemic has been particularly cruel to small businesses across the US, with many already having shut up shop for good. Oklahoma may have begun its multi-phase re-opening back in April, but its small businesses are still feeling the strain. Just how many will be permanently lost to the crisis is still an unknown quantity, but fortunately for those remaining, help is available – if you know where to look for it. In March this year, the government authorized the Small Business Administration to fund several new programs specifically designed to support those small businesses struggling to cover payroll and operating costs. Due to the huge uptake in the programs, both loans – the Payment Protection Program and the Economic Injury Disaster Loan- were placed on temporary hold until new funds became available. Those funds have now arrived, and businesses are once again being encouraged to apply. Eligibility is limited, and the loan funds can only be used against a very specific set of expenses, but for those small businesses struggling to keep their heads above water, the loans could make all the difference between sinking and swimming. If you’re a small business owner in desperate need of a cash injection, here’s how to apply for a small business loan in Oklahoma.
The Paycheck Protection Program
In essence, the Paycheck Protection Program is a low-interest loan designed with the aim of providing financial relief to small businesses struggling to keep up with crucial costs as a result of the COVID-19 crisis. Most appealingly, it offers full loan forgiveness on the condition that at least 75% of the loan is used towards payroll, and the current payroll is maintained for at least 8 weeks further to loan origination (in other words, the number of staff you have when you apply for the loan will need to be the same 8 weeks later. If any staff leave and you are unable to replace them for reasons outside of your control (e.g. if a replacement turns down a job offer), you can still apply for loan forgiveness providing you show that every effort has been made to retain the payroll as it stands).
Loans are available at 2.5 times the average monthly payroll, up to a maximum of $10 million. The loan maturity is set at 2 years, and the interest rate is a very attractive 1%. Payments are automatically deferred for the first 6 months, with any further deferrals granted at the discretion of the lender. You won’t need to provide a personal guarantee or put up any collateral. Unlike most SBA funded loans, you’ll also not need to show an inability to obtain credit elsewhere. There are no early repayment penalties, and neither the SBA nor the government will apply any fees to the loan administration. If you don’t use the full amount of funds towards payroll, it’s expected that you use the remainder only towards other crucial operating expenses such as rent, mortgage interest payments, utilities, and other fixed business debts.
How to Apply for the Paycheck Protection Program in Oklahoma
The Paycheck Protection Program may be administered by the SBA, but all applications will need to be made via an approved lender. This includes existing SBA 7(a) lenders, federally insured depository institutions, federally insured credit unions, or Farm Credit System institutions.
As several businesses have already reported being approached by scam lenders, don’t be tempted to put your application through any lender that isn’t listed on the SBA’s Paycheck Protection Program lender search tool. If a lender proactively approaches you offering a deal that sounds too good to be true (longer loan terms, guaranteed acceptance, etc.) it probably is. In addition to the scams, there have also been reports of approved lenders taking unnecessarily long times to process applications, particularly if those applications are for loans of relatively small amounts. Before putting your faith in any one lender, shop around: ask how many applications they’ve received, how many have been approved, and how many have been paid out on. If the numbers don’t add up, move on.
Before you apply, note that the program is only open to specific entities. As per the SBA, only the following are eligible to apply:
- Small companies that meet SBA size standards for industry and size
- Non-profit organizations, veterans organizations, and tribal concerns that employ less than 500 or that meet SBA size standards
- Any organization with more than one location and a NAICS Code that begins with 72 that employs less than 500 workers per base
- Sole proprietors, independent contractors, and self-employed persons
Once you’ve chosen your preferred lender and checked your eligibility, download the PPP Borrower Application Form from the SBA website. Hand the completed form, together with your business records, to your lender. Note that all applications will need to be completed by the program cut off point, June 30, 2020.
The Economic Injury Disaster Loan
The Economic Injury Disaster Loan is an existing program that’s received additional federal funding as a result of the crisis. While it doesn’t offer the full loan forgiveness that’s available under the Payment Protection Program, it does include several very attractive benefits of its own, including a low-interest rate of 3.75%, a generous repayment term of up to 30 years (depending on the needs of the business), and the option to take a forgivable advance of up to $10,000 (depending on the number of covered employees) that’s paid as a grant within three days of the loan being approved.
Like the PPP, the EIDL is intended to cover payroll and other crucial costs only. While there’s nothing to stop you applying for both loans, you’ll need to confirm that the funds from each will be used for different purposes (e.g., if you use the PPP for payroll, the EIDL should be used for operating costs, or vice-versa).
How to Apply for the Economic Injury Disaster Loan in Oklahoma
Before applying, check your eligibility. Due to limited funds, the program is currently limiting applications to agricultural concerns only. If further funding becomes available, eligibility may widen, so keep checking the SBA EIDL portal for updates. Unlike the PPP, all applications for the EIDL should be made directly through the SBA. You can apply online at covid19relief.sba.gov; the application is streamlined for ease of use, but you are invited to contact SBA Customer Service Center on (800) 659-2955 or via email at email@example.com should you have any queries about either the program or the application.