SBA to Provide Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
Process for Accessing SBA’s Coronavirus (COVID-19) Disaster Relief Lending
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 to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the Coronavirus (COVID-19).
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 for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities.
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 without credit available elsewhere; businesses with credit available elsewhere are not eligible. 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.
Usage: Funds made available must be used for certain purposes. Acceptable purposes include working capital, paying fixed debts, payroll, accounts payable, and paying other bills that could have been paid had the disaster not occurred. It is NOT acceptable to use loans to replace lost sales, enhance profits, refinance long-term debt, or fund expansion opportunities.
- Loan limitations: The statutory limit of SBA loans is $2 million. The amount of each loan is further limited to the economic injury determined by SBA after subtracting business interruption insurance and other capital recoveries up to the administrative lending limit. The SBA will also consider potential contributions that are available from the business and/or its owner(s) or affiliates. can waive the $2 million statutory limit if the business is a major source of employment.
- Interest Rate: The interest rate for small businesses is 3.75% and for private nonprofit organizations is 2.75%.
- Maximum loan term: The maximum term is 30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay.
- Collateral: The SBA requires collateral for all loans over $25,000. Real estate is acceptable as collateral. SBA has said it will not decline a loan for lack of collateral, but it will require the borrower to pledge collateral that is available.
- Economic injury: If applying for disaster declarations related to the coronavirus outbreak, only select “Economic Injury” when inquiring about your business losses.
* (The above is from SBA)
The fastest way to apply is online at https://www.sba.gov/page/disaster-loan-applications