COVID-19: Loans and Additional Funding for Small Businesses [Updated for 2022]

Updated: December 20, 2021
The impacts of COVID-19 are clearly resulting in changes in finances, making this time especially difficult for many businesses. Learn about the financial options available to small businesses during the pandemic in 2022.

In this guide, we’ll cover:

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What are small business loans?

Small business loans are sums of borrowed money that help companies with their financial expenses. These loans can be used for a variety of reasons including a company’s mortgage, working capital, paying employees, new equipment or disaster relief. The terms and eligibility requirements vary by loan.

Related: Business Loan Rates: Key Considerations


COVID-19 small business loans

The U.S. Small Business Administration (SBA) offers low-interest federal disaster loans for small businesses in certain areas that have faced financial hardship due to COVID-19. These Economic Injury Disaster Loans (EIDL) offer a maximum of $2 million that can help companies with their revenue losses. These loans are used to assist with various business finances including payroll, accounts payable and other bills.

For small businesses, the interest rate for these loans is 3.75%. If you need a loan with a long-term repayment plan, the SBA is offering loans with 30-year maximum repayment terms. It’s important to note that each loan’s repayment term can vary. It’s assessed on an individual basis, and the terms are based on a rate the business owner can pay back.

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Lender programs

The SBA uses its Lender Match tool to help pair small businesses with lending partners that can provide financial assistance in the form of small or large loans. The SBA also offers business consultations through its experienced counselors.

Loan lenders aim to match you with a loan specific to your needs. Be sure to confer with an SBA-approved lender to review any loan restrictions or guidelines. In addition, check your eligibility requirements to help with your application approval. Here are some of the lender programs the SBA offers:

  • 7(a) program: This all-inclusive loan program offers small businesses up to $5 million.
  • 504 loan program: The 504 loan program requires proceeds to be limited to the acquisition or refinancing of assets, such as real estate, equipment and machinery. It aims to assist economic development and the creation or retention of jobs.
  • Microloan program: This program goes through non-profit lending organizations for underserved markets. It offers up to $50,000, although the average loan size for this program is $13,000.

CARES Act small business stimulus package

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the largest emergency aid package in US history, providing $2 trillion to boost the economy and provide relief for workers and small businesses. The act and subsequent legislation established four new temporary programs to help small businesses affected by the COVID-19 pandemic. Here are the funding options available to small businesses seeking financial relief:

Paycheck Protection Program

Update: As of 05/31/21, the PPP is no longer available. We’ll update this article with new developments or you can visit for the most recent information.

The Paycheck Protection Program (PPP) helps small businesses pay their employees and prevent layoffs. By the time the first round of PPP closed on August 8, 2020, the program had distributed $523 billion in forgivable loans to 5.2 million small businesses.

The SBA reopened PPP on January 11, 2021 to eligible first-time borrowers through its First Draw PPP loan program and on January 13, 2021 to businesses that needed to borrow again through a Second Draw PPP program.

These loans are forgivable if two requirements are met: (1) all employees are kept on the payroll during the 8- to 24-week period following loan disbursement and (2) at least 60% of the money is used to fund payroll (including employee benefits). The rest of the loan must be spent on qualifying expenses, such as rent, utilities, interest on mortgages, COVID-related safety gear for employees and/or uninsured property damage costs caused by looting or vandalism in 2020.

The PPP ended on May 31, 2021. However, existing borrowers may be eligible for PPP loan forgiveness.


EIDL Loan Advance

While Economic Injury Disaster Loans offer up to $2 million to help cover various business costs, the EIDL Loan Advance gives small businesses an emergency advance of up to $15,000. This loan advance is 100% forgivable and does not have to be repaid.

To receive this advance, you must first apply for a COVID-19 EIDL by December 31, 2021. You do not need to accept the loan or be approved for the loan to receive an advance.

To qualify, you must be in a low-income community, demonstrate more than a 30% reduction in revenue during an eight-week period beginning on March 2, 2020, or later, and have 300 or fewer employees.


SBA Debt Relief

Beyond loans, the SBA is also offering debt relief options to help small businesses stay in business. The SBA will automatically pay the principal, interest and fees of current 7(a), 504 and microloans for a period of six months. It will also pay the principal, interest and fees for any new 7(a), 504 and microloans issued before September 27, 2020.

Additionally, for those with any SBA-serviced disaster loans that were in “regular servicing” status on March 1, 2020, these loans will be automatically deferred through March 31, 2022. Interest will continue to accrue, but no payments will be due until 2022, giving small businesses a little extra room to breathe.

How to find additional funding through loans

If you seek additional funding, it’s important to know how to find it and what the proper steps are to attain it. This ensures you’re seeking reputable assistance, submitting an accurate application and getting help as quick as possible. According to the SBA, here are the steps to take to find additional funding in the form of loans for your small business:


1. Check for disaster declarations

The SBA website provides you with information regarding disaster loan assistance. Once you’ve accessed the website, input your location to determine if you qualify for additional funding. The website is up to date with current declared disasters in various regions.


2. Apply for a small business loan

If your area is eligible for disaster loan assistance, find a small business loan and submit your application. When you apply for COVID-19 disaster declarations, create an account and select ‘Economic Injury’ regarding your business losses.


3. Check your approval or denial status

After you’ve submitted your application, wait for it to be received and reviewed. Log back into your account on the SBA website to determine if you’ve been approved or denied for a small business loan.


Financial advice from experts

When dealing with an outbreak, pandemic or disaster, always consider expert advice that can help you better handle your business. The better you understand and implement their advice, the greater chance your business can have at sustaining these periods of financial uncertainty.

Here is advice from the Small Business Association (SBA) and the Centers for Disease Control and Prevention (CDC) to help you better manage your business during this time of potential financial distress:


Test capital access options

In the event of unexpected incidents, it’s important to explore and test your capital access options to ensure you have the funds you need regarding payroll and inventory. This is especially helpful in relation to market changes — including both drops and increases in demand. The better you’re able to assess your options, the easier it is to determine where you stand financially when situations like the COVID-19 outbreak arise.


Stabilize your workforce capacity

Consistently check in with your employees and ensure they’re able to fulfill their duties during times of crisis. This can help your business continue to grow financially despite the circumstances. Regularly check in with your employees to ensure they’re not ill or showing symptoms. If they begin to display symptoms, send them home immediately to prevent it from spreading to other members of your staff. If you have several sick employees, spread out their responsibilities to other employees or consider enacting a remote work policy until the illness begins to dissipate.


Manage your inventory

Ensure you’re able to maintain a good stock of products and supplies during these periods. This is especially important if you foresee an increase in demand for one of the products you sell. For example, in the case of COVID-19, hand sanitizers and disinfectant wipes have seen an exponential rise in demand that correlates with the increased spread of the disease. Managing your inventory and distribution helps you better prepare for these situations. Consider diversifying your distributors to ensure you can continue to receive inventory if one supplier can’t meet order requests.


Meet cleaning material demand

In case you need to provide extra cleaning protection for your customers and staff, it’s important that you’re well-stocked with cleaning supplies and materials. Verify your maintenance contracts and ensure you have enough supplies to meet an increase in demand.


Review your insurance coverage

If you own a small business, it’s especially important to contact your insurance agent to better understand your policy and coverage. Although it’s impossible to know exactly what incidents lie ahead, knowing or adjusting your coverage helps you feel better prepared. You can also invest in business interruption insurance, which can help during unforeseen circumstances in the future.


Be mindful of movement restrictions or access controls

If customers are affected by guidelines that restrict their reach to your company, be mindful of ways to help them. They may also want to avoid your physical location out of concern about public contamination. For example, if your storefront has to close, consider expanding your online services to better serve your customers. Use SBA’s Resources Partners and District Offices to help you strategically plan for these circumstances.

Related: Ideas to Position Your Business for a Strong Recovery After COVID-19


Communicate with your customers

When unexpected instances arise, remember to maintain a steady flow of communication with your customers. Let them know of any changes in operating hours, closures or changes in operation such as protective measures. Make sure your customers know that you’ve taken the steps to assist them and protect them from harm when they do business with you. The SBA also suggests offering incentives to customers who might be reluctant to buy any products during these circumstances.


Create a plan

One of the best ways to prepare for unexpected incidents is to develop a strategic plan among your staff. It needs to include the measures and provisions your company plans to take in the event of an improving or declining situation. Consider creating practice scenarios that your employees and management team can navigate. The Federal Emergency Management Agency provides several example scenarios for your use.

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Last updated: Aug 10, 2020