Helping Businesses Recover from COVID’s Impact

As I listen to our business clients talk about how the pandemic has affected their companies, it’s like a hurricane without the wind, a 9.0 earthquake without the shaking, or a wildfire without the flames. Even though businesses haven’t been visibly demolished, many have been eviscerated. The building may be standing but it was quickly evacuated and its tenants displaced. Companies’ revenues were wiped out, slashed from millions to zero in some cases. Financial losses were huge, but COVID also exacted devastating personal losses, taking lives and livelihoods, leaving intense suffering in its wake.

What I hear in business owners’ voices is real trauma, profound loss, plus confusion about what to do next. Most people aren’t defining this struggle as Post Traumatic Stress Disorder (PTSD). But how is the pandemic any different from surviving a natural disaster or life-changing trauma? Owners are experiencing the same symptoms, intense fear, shock, anger, helplessness, horror and even guilt.

The emotional toll of what we’ve all been through during COVID-19 can’t be quantified, but it also can’t be ignored. Anyone suffering from trauma will recover faster if they get outside help. The most important thing to understand is you are not alone.

Planning Your Next Phase of Recovery

Many businesses got a lifeline through the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP). But that’s like being provided a FEMA trailer after a natural disaster. It offers a temporary safe haven but doesn’t help you rebuild.

In order to rebuild, your company needs money, but your balance sheet is likely in tatters after this hellacious year, which means getting a loan could be challenging.

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SBA No-fee 7(a) Loan

That’s why borrowing through one of the SBA’s loan programs is a great opportunity. The SBA exists to help businesses both during periods of prosperity and times of crisis. One of the ways they do that is by offering loans that banks typically would not be willing or able to provide on their own.

If you’re wrestling with how to rebuild or expand your business post-COVID, here’s a great opportunity to consider: an SBA program called a 7(a) loan. The SBA usually charges fees with the 7(a) loan. Thanks to economic-aid legislation signed into law last year, however, the SBA is waiving fees on 7(a) loans up to $5 million. It’s the first time we’ve seen this in a decade, and it’s all part of a massive federal effort to help businesses recover from the ravages of the pandemic.

The SBA originally intended its 7(a) program to provide financial help to small businesses in particular circumstances, such as when a business needs short- and long-term working capital; needs to purchase furniture, fixtures, and supplies; seeks to refinance current business debt; and/or when real estate is part of a business purchase. But the pandemic has created historic, world-war-era hardships that require an enormous government response — including helping COVID-devastated businesses get back on their feet.

As part of that federal response, the SBA’s 7(a) loan program has been temporarily modified. The economic-relief law increased the 7(a) loan guarantee to 90% and allowed for reduced or no fees for the borrower and the lender. It also temporarily increased the 7(a) express loan limit and loan guarantee, so businesses would have access to needed working capital. And it extended the Small Business Debt Relief program, Section 1112 of the CARES Act, to defer principal and interest payments on new and existing 7(a) loans for eligible entities.

That’s the good news. The hard part is: You can’t just walk up to a window at SBA headquarters and get one of these loans. The SBA works through banks to loan out its money. And not all banks are equal in their knowledge of and experience with the ins and outs of that process. So, you want to be careful about which bank you choose to help you seek an SBA loan.

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Pick the Right Partner

There are smart, and not-so-smart, strategies to consider when pursuing SBA financing. We specialize in the smart ones. In fact, we’ve got a team devoted to helping you figure out the best fit and approach for you and your business. We also advise you on the right amount to apply for.

Applying used to be a slow-motion pain in the neck, requiring loads of documentation that took forever to get approved. But Capital Bank, N.A., has transformed that experience. Our process saves you time, in part because we have a thorough understanding of eligibility requirements. The SBA’s eligibility factors are complicated, which is why working with one of our 7(a) loan experts is so important.

Rebuilding your business’s future is daunting. And it takes more than money. It takes understanding how to best use that money, before you even apply for a loan. That’s why you don’t want to just go with a bank that can do it — you want to partner with a bank that can do it well. You need a bank that’s willing to tell you what you need, not simply what you want to hear.

Most of all, you need a bank that has your back. Personally — after all the suffering, the loss, and the confusion you’ve had to face — I believe you deserve it.

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