SBDC helps small businesses with SBA disaster assistance
Many small businesses and startups are looking for help in dealing with the impact of COVID-19. Randy Burch and his colleagues are critical points of contact for free, confidential, and the most up-to-date answers for entrepreneurs.
Burch is the Associate Managing Director of America's Small Business Development Center at Texas Tech University. It's the headquarters for several other university-based offices within a 95-county area in Northwest Texas, which are all part of the national network of SBDCs.
While still fulfilling their usual mission of assisting businesses through consulting, training, and research, Burch says most of their efforts right now are focused on coronavirus-related disaster recovery.
The advice he gives most often these days: "This is a nationwide situation, so the quicker you apply for a federal assistance loan, the quicker you could get some relief."
Burch says he and his staff have been fielding inquiries about disaster assistance since mid-March. "We've mostly been holding individual virtual meetings with business owners who need help answering the questions on the U.S. Small Business Administration's disaster loan application," he says. "We can even walk them through each step of filling out the form online."
Burch says in that application process, small business owners don't request a loan amount. Instead, they enter what their monthly expenses are. He says the first loan disbursement would cover about six months of the businesses' costs. The loan's interest rate is 3.75% on a 30-year note. The first payment isn't due until a year after the company receives the loan, and there's no penalty for paying it off early.
"Almost all small businesses are pretty tight cash flow. This gap loan can get them through those next few months until things begin to operate as normal," he says.
Burch says most small businesses will be eligible for these loans. "If a business has been in existence for less than 12 months, it's going to be a little more difficult to qualify, but the majority are still going to be eligible. All applications will go to a loan officer who will pull a credit a report and look at the business's ability to pay before this disaster, prior to March. They're not going to even take collateral for up to the first $25,000."
Burch says with so many rapid developments at the federal level over just the past few weeks, more changes and more assistance are likely. "Now we're talking about the disaster loan program from SBA. But there are a lot of other things that are under discussion in Washington that are going to be coming forward for small business owners. So keep watching our Facebook page; Twitter account; and our local, regional and state websites."
As for startup entrepreneurs getting ready to launch, Burch acknowledges there are unique challenges in this environment.
"I tell them just to stay the course. Use this time to do market research and perfect their product or idea."
He adds, "We know this is not going to last forever, and the economy will bounce back pretty quickly after this is all over."
Burch says the COVID-19 virus's economic impact underscores the importance of small business entrepreneurship.
"It's the backbone of our economy. Without small businesses, the majority of the people across our country would not be employed. Sure, I've heard some doom and gloom. I've also heard of some owners saying they're keeping all their workers because they know their business is going to be able to make it through this."
Burch says this challenging time also provides some opportunities.
"We're all learning through this experience. I hope we never see another disaster that affects the entire country like this. But in small business, you're always going to have some kind of disruptions or obstacles. Maybe this is a time to begin to think through how you handle other challenges. We're here to help with that, too."