From Clemson Agribusiness Associate Steve Richards.
The CARES (Coronavirus Aid, Relief, and Economic Security) Act has been in the news recently. You may have heard stories about emergency loans, cash for individuals, and cash for small businesses. While the details are still being hammered out in Washington, these are some steps you can take right now if your business needs cash*.
- Talk to Your Current Lender
Reach out to someone who is familiar with your operation – your current lender. Many lenders have options available for loan payment deferments, credit limit increases, and possible interest rate reductions. Your lender is invested in your business and wants to help you succeed.
- Apply for a Federal Small Business Administration (SBA) Disaster Relief Loan
Regulations on this loan option are still being written and loans take several weeks to process. If you think you need this assistance, apply now. If you do not like the terms of the assistance, you can always refuse to take it. To apply for SBA financing, apply online at https://disasterloan.sba.gove/ela/.
The general details of SBA Disaster relief loans:
- Loan limits: $2,000,000 with collateral; $25,000 without collateral
- Loan terms: Interest rates of 3.75% fixed and amortization of up to 30 years
- Recent start-up businesses are eligible, but you must provide profit and loss projections
- Loans are contingent on a credit check, verification of eligibility, an insurance review, and an estimation of losses.
- Contemplate the Impact of Additional Debt
Some of these SBA loan packages may include a debt forgiveness option. However, you must consider the impact of additional debt on your operation and how that affects your future if this debt is not forgiven. The Clemson Agribusiness Team is available to help if you need additional agribusiness related resources or assistance: https://www.clemson.edu/extension/agribusiness/
*As always, make these decisions with the assistance of your professional advisors: your accountant, your tax advisor, your attorney, and your management team.
Steve Richards is an Extension Associate with Clemson’s Agribusiness Team who specializes in Management, Finance, and Specialty Crop Marketing. You can contact Steve at Stricha@clemson.edu