March 16, 2020
There has been a great deal of discussion nationwide about economic relief for small businesses impacted by the COVID-19 virus. The SBA announced they will provide small businesses impacted by COVID-19 up to $2 Million in disaster assistance loans. The full release can be found HERE. Below is our synopsis.
Now that the funding has been approved by Congress the next step that is currently being undertaken is that local municipalities and/or States are working with the SBA to enact the local disaster declaration. Once this is done small businesses will be able to apply directly to the SBA Disaster Office for long term loans described below. These loans will not be processed by traditional SBA lenders. As of today, no disaster has been formally declared. That will come soon.
The mechanism to apply is:
- – Go to https://disasterloan.sba.gov/ela/
- – In the upper right-hand corner, click on Search Declarations
- – Enter your state and county
- – If assistance is available in your area, Corona or Covid-19 relief or something to that effect will show up. We have searched many areas and have not found any yet. Therefore, it might be premature, but worth a few minutes of your time if this is something that you need.
- – If it is declared in your area, click the back arrow and Apply Online (blue circle in the middle of the page).
The phone # is 800-659-2955. However, both the site and number are somewhat overloaded right now.
Here is some background regarding Disaster Loans:
Economic Injury Disaster Loan (EIDL) assistance is issued by SBA to approve loans for small businesses and private, non-profit organizations in designated areas of a state. The governor must declare a state emergency and request relief from the Federal government. Typically, disasters are declared on a county to county basis. This disaster may be approved nationwide. The loan program has a maximum of $2,000,000 limit for each borrower. Think of it as a working capital loan for payroll, A/P, rent etc. The interest rate (which can change from time to time) is 3.75%. The maximum maturity is 30 years but that is rare. Once the borrower has established repayment ability and demonstrates a good credit history SBA determines what the “affordable” payment will be. Once the monthly payment, amount of injury, interest rate are calculated the maturity is established. The payment is determined first, then the maturity is established.
There is some talk of creating a product for the guaranteed (7(a) and 504) programs much like the STAR program used for 9/11 recovery. But that would be considered a long-term fix. The immediate relief from SBA will come from Disaster loans.
Click HERE to download NDC SBA Fact Sheet for COVID-19.
Sign-up HERE to receive the most up-to-date information on Small Business Disaster Assistance for Covid-19.