More than 36 million Americans lost their jobs because of the coronavirus pandemic. Unemployment levels haven’t been this high since the Great Depression. While you probably won’t find Bill Gates standing in a soup kitchen line, you will find thousands of Americans who are worried about how they’ll get through tomorrow.
If you lost your job and you don’t know how you’ll survive the next few months, coronavirus loans may be your ticket out of financial calamity.
A coronavirus hardship loan is a type of personal loan that credit unions and banks are offering to help people struggling during the pandemic. These loans go by different names:
- Coronavirus hardship loans
- Disaster assistance loans
- Coronavirus relief loans
Here are some things you should know about these loans:
- They are designed for people financially impacted by the coronavirus.
- They come with consumer protections, like a temporary 0% rate and deferred payments for 60-90 days.
- Repayment terms are 12-36 months.
- APRs range from 3%-18%.
- Loan amounts range from $1,500-$5,000.
Check your local credit unions and banks to see if they’re offering hardship loans. Keep in mind that the bank or credit union will:
- Check your credit,
- Need proof of your ability to repay the loan, and
- Need proof of hardship.
Special Loan for Federal Government Employees
If you’re a federal employee and have been directly impacted by the coronavirus, there is a special loan from the Federal Employee Education & Assistance Fund (FEEA).
These loans are:
- Up to $1,000
In order to qualify, you must be a federal employee who has exhausted all of your annual, advanced, sick, and Families First Coronavirus Response Act (FFCRA) leave and are currently on leave without pay. You must also be one of the following:
- Hospitalized with COVID-19,
- Required to quarantine and can’t work,
- Severely ill with COVID-19 and can’t work, OR
- Acting as the main caregiver for a family member (living in your home) who is sick with COVID-19.
If you meet all of these requirements and you make less than $75,000 a year, you may be able to get a $500 grant/$500 loan combo.
The FEEA loan is for a very specific group of people, but if you fit these requirements, you may get the relief you need without having to take out a regular personal loan.
Taking out a loan is a big decision, and it’s also a personal one. Whether or not you should take out a loan really depends on your financial situation.
- Will you be able to start repaying the loan in 2-3 months?
- What will you use the funds for?
- Do you have good credit?
- Are you even eligible for the loan?
If you lost your job and you’re struggling to make rent or put food on the table, installment loans may help you get over this rough patch.
But remember – you’re going to have to start paying this loan back in a few months. Do you think you’ll have a job by then? If so, will you make enough to cover the cost of the loan?
A loan should really be your last resort, but if you have no other way to cover your cost of living, a hardship loan may be a practical solution. Just make sure that you choose a reputable lender.