Countless small businesses suffered immense losses over the previous year. As the global pandemic continues, even in the face of vaccine rollout programs across the country, threats of economic disruption and downturn remain. Consequently, it can be easy to see why most small businesses have also run into legal troubles from missed payments.
Commercial building owners who rent their properties are entrepreneurs too. In particular, they’re the most at risk from foreclosure when they are unable to make monthly mortgage payments because cash flow has significantly been halted.
Fortunately, a foreclosure can usually be avoided with the right steps. There are other means through which a small business can receive debt relief to help combat this threat as well. Different kinds of business loans are readily available for entrepreneurs as part of the Biden Administration’s Covid-19 relief package.
Deterring a Foreclosure
It’s important to note that all states allow a challenge to a foreclosure proceeding. Entrepreneurs should already have legal counsel, in the form of an experienced eviction attorney, if it ever comes down to taking the proceeding to court.
Winning against a foreclosure case can be fairly easy. A small business owner should simply argue that there’s a good and legal reason that they temporarily shouldn’t be held to the terms of the contract. In this instance, the global pandemic should provide a valid argument.
Open Communication
Before letting a foreclosure proceeding get to court, however, commercial building owners should definitely be preemptive and proactive. Take the time to communicate with a mortgage lender and come up with an agreement that will be beneficial for both parties.
More often than not, most commercial lenders would rather not have to go through the legal process of foreclosing a property as well. As much as possible, foster a positive relationship with them, especially during this health crisis.
A Sigh of Relief
After successfully averting a foreclosure threat, consider securing a debt relief package next. Business loans have always been a viable option for business owners to keep their operations going. It also provides different benefits to these entrepreneurs, most of which are especially relevant during the current health crisis.
The global pandemic has pushed the economy into unrest, which has also devastated small businesses. As part of the current administration’s plans for economic relief, the government aims to provide vital support that small business owners require towards recovery. These are some relief packages that entrepreneurs should definitely consider applying for.
Economic Injury Disaster Loan
The Economic Injury Disaster Loan (EIDL) is a loan administered by the U.S. Small Business Administration (SBA). This particular loan is aimed at providing economic relief to small business owners and nonprofit organizers that faced a loss of revenue throughout the global pandemic.
The EIDL has a very low fixed interest rate of 3.75% and 2.75% for small businesses and nonprofits, respectively, which is payable with a maximum 30-year term. Funds received from an EIDL loan can be used for necessary operating expenses like mortgage payments, utilities, or healthcare benefits. The limit for this particular loan was also recently raised from $150,000 to $500,000.
To qualify for an EIDL loan, an entrepreneur should be able to prove that their business suffered more than 30% revenue reduction during an 8-week period beginning on March 2, 2020, or later. Likewise, they should also have no more than 300 employees.
SBA Express Bridge Loans
A small business owner’s EIDL application can take quite a while to process and approve. For entrepreneurs that are already connected with an SBA Express Lender, they should also consider applying for an SBA Express Bridge Loan Pilot Program in the meantime.
This program is particularly targeted to allow small business owners to pay for their expenses while waiting for their EIDL to be approved. It can offer a quick cash injection of up to $25,000, which can be extremely vital for struggling entrepreneurs. The loan can be paid in full or in part with the funds to be received from their EIDL loans.
Boosting Probabilities
To easily secure relief funds, small business owners should definitely act fast during the application process for specific loans. Everyone is in dire need of economic support right now, immediately applying during the first day of the availability of a loan will surely maximize any entrepreneur’s chances. It’s also crucial to have good bookkeeping at the ready.
Inaccurate financial records will easily forfeit any small business owner’s loan application or eligibility. Finally, establish a connection with potential lenders or a lending officer to remain updated on new rounds of loans or any other relief program that might come up in the months ahead. Handling debts can be extremely stressful, especially during a global pandemic, but it’s not necessarily impossible to overcome.