As the coronavirus pandemic threatens to crush small businesses across the country, the Small Business Administration launched a pilot program this week to deliver expedited financing for eligible businesses as they await relief from the federal government.
The Express Bridge Loan Pilot Program allows authorized lenders to get financing on an emergency basis to small businesses while they apply and await for long-term relief. Eligible small businesses include those located in counties that have been declared disaster areas by the White House and those based in any state that have been adversely impacted by the virus outbreak.
A bridge loan is a type of short-term loan that’s intended to assist businesses in the gap between two long-term financing loans. Frequently, companies use bridge loans when necessary to cover cash shortfalls when they must repay one loan before having time to obtain a new long-term loan.
Companies generally can pay off a bridge loan at any time without facing a penalty.
The $2 trillion stimulus package that received congressional approval on Friday includes more than $370 billion in funding for small businesses. Businesses with fewer than 500 employees are eligible for up to $10 million in loans, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities.
The government will pay off the loan balance so long as the companies either do not lay off workers or rehire ones they’ve already let go.
Treasury Secretary Steven Mnuchin said small businesses will be able to go into banks “next Friday and be able to get loans.” The Trump administration will release further guidance in coming days, he said.
“We’re going to get money to you,” he said.