SBA help is available – Economic Injury Disaster Loan program
Updated March 25, 2020
From the SBA website:
The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- Determining Business Size and Eligibility – The SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses. In order to qualify as a small business, a company has to meet the size standards set out by the SBA. Size standards vary by industry, and are generally based on the number of employees or the amount of annual receipts the business has.
To help you understand how SBA eligibility is determined, we have included additional links and resources, here:
- Does my business qualify as a “small business?”
The SBA provides a Size Standards Tool. Click here.
- How does the SBA calculate annual receipts?
The SBA calculates annual receipts in accordance with 13 CFR 121.104.
- How does SBA calculate number of employees?
The SBA calculates number of employees in accordance with 13 CFR 121.106.
- Does my business qualify as a “small business?”
- Expected Terms – Loans up to $2 million, 3.75% rate, maximum term 30 years (determined on a case by case basis)
- Working Capital Funding – The funding will be for businesses that have suffered in a variety of ways as a result of the coronavirus. The funding will be for working capital, not lost profits or debt refinancing. The working capital can be used to pay for operating expenses because of the disaster, reduced sales, lost contracts, supply chain disruption, having employees stay home as an abundance of caution or for care of a family member, and other financial issues related to the outbreak.
- Underwriting Process – The underwriting process will look at the borrower’s creditworthiness but there is more flexibility now due to the outbreak. Repayment ability will be based on pre-disaster cash flow.
- Deferment on Principal – Anticipating a 1 year deferment on principal. Legislation currently pending in the US Senate may affect deferment, or allow for loan forgiveness under certain circumstances.
- Application – Apply through the SBA online at https://disasterloan.sba.gov/ela/
- Please note that this is a fluid situation, with many details unknown. Not all states and territories are currently eligible (as of March 20, 2020) but it is anticipated that all will be eligible in the near future.
The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
- Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the Coronavirus (COVID-19). This will apply to current and future disaster assistance declarations related to Coronavirus.
- SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
- Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
- SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
- SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.
- For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail email@example.com.
Small business owners in the following designated states are currently eligible (as of March 20, 2020) to apply for a low-interest loan due to Coronavirus (COVID-19): Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia
For additional details and the most update to date guidance on SBA disaster assistance in response to COVID-19 including the list of eligible states and territories please visit https://www.sba.gov/disaster-assistance/coronavirus-covid-19.