It’s been a week since the CARES Act became law. By then every stakeholder of business, from accountants to lawyers from investors to bankers, have held webinars and written blogs to how a company can take advantage of the covid19 stimulus package. While my initial thoughts were based in truth, I have learned a lot more strategy this week.
So I contend that my original thought still stands: African startups domiciled in the U.S. are eligible to get this money and they should.
The SBA Disaster Loan, also called the “Economic Injury Disaster Loan,” is a newly-streamlined version of the former disaster loan. It is an online application that has been radically simplified at https://covid19relief.sba.gov. It can be completed in about 20 minutes. An important feature of the SBA Disaster Loan is that it comes with a $10,000 cash advance grant, which can be sent to your bank account in three days. The loan itself is a 3.75% interest rate with long term repayment, or 2.75% for nonprofits. There are no fees or prepayment penalties, and the amount of the loan can be changed after submitting your application. This fund comes straight from the U.S. Treasury; we encourage impacted businesses, nonprofits and independent contractors to apply.
I encourage every founder to apply for the EIDL loan to receive the cash advance.
As for the other loan programs, it will highly depend on who is on your cap table as to whether or not you get disqualified from those programs. So if you’ve done a Series A or B round, there’s an affiliation clause that actually makes large VCs a disqualifier to the IRS. Talk to your lawyers and investors. You pay a good amount of money to maintain filings in multiple countries. You may as well let it work for you!
I shared links to my sources with my email readers, clients and founders, this week. If you want the links that informed my thoughts in this post, get on my email list!