Mindful of the challenges being faced by small businesses nationwide as they lose revenue due to the coronavirus pandemic, the U.S. Small Business Administration is doing its part to provide support in the form of low-interest federal disaster loans available to eligible borrowers in designated states and territories.
Here is what you need to know:
Q. If I qualify, how much can I borrow from the SBA?
A. The SBA’s Economic Injury Disaster Loans offer up to $2M in assistance to help eligible small businesses overcome temporary revenue losses.
Q. Are the loans limited to small businesses?
A. No, private, non-profit organizations may qualify for funding as well.
Q. What can the loans be used for?
A. Borrowers may use the loan proceeds to pay fixed debts, payroll, and accounts payable, and to fund other working capital needs not being met due to the impact of COVID-19.
Q. What interest rate is the SBA charging?
A. Interest rates under the loans are 3.25% for small businesses and 2.75% for non-profit organizations.
Q. Are the loan terms favorable?
A. Yes, to keep repayment obligations affordable, the SBA is offering long loan terms of up to 30 years. Exact terms will be determined by the SBA on a case-by-case basis, taking into account each borrower’s ability to repay.
Q. What are the loan application requirements?
A. Applicants must provide their gross revenues for the past 12 months; cost of goods sold for the past 12 months; and (for rental properties only) lost rents due to the coronavirus crisis. Eligibility considerations will include compensation available from other sources to offset the economic injury, which other sources include (1) grants or other reimbursement (including loans) from government agencies or private organizations, and (2) claims for civil liability against other individuals, organizations or governmental entities. Of note, for expedited loan application processing, the applying business must have been operating for at least one year prior to this disaster.
Q. Where must my business be located to qualify for one of these SBA loans?
A. Loans are available to eligible businesses in Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia (as well as those located in certain designated counties in Alabama, Arizona, Arkansas, Idaho, Iowa, Kentucky, Mississippi, Missouri, North Dakota, Oregon, Texas, Vermont, Wisconsin, and Wyoming, where that state’s Governor has submitted a request to the SBA for EIDL assistance).
This blog post is not offered, and should not be relied on, as legal advice. You should consult an attorney for advice in specific situations.