In response to the Coronavirus (COVID-19) pandemic, the US government has undertaken significant action in recent weeks to offer relief to small businesses, which may be disproportionately affected by the pandemic and its fallout. This following is a summary of the assistance currently available to small businesses.
On March 6, 2020, Congress signed the Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020 (Supplemental Appropriation). The Small Business Administration (SBA) is now able to make an estimated $7 billion in low-cost loans to affected small businesses in the form of economic injury disaster loans (EIDLs).
In Georgia, the EIDL program for small businesses is available since the governor declared the state a disaster area according to the Stafford Act, and the president subsequently approved the declaration on March 18. The EIDL loans offer up to $2 million in assistance per small business. These loans can pay for expenses not covered because of the disaster, such as fixed debts, payroll, accounts payable, and other bills. The interest rate is 3.75% for businesses without credit available elsewhere (those with credit available elsewhere are not eligible) and 2.75% for nonprofits. SBA offers loans with long-term repayments, up to a maximum of 30 years.
SBA measures small businesses based on published size standards. Per the SBA, “A size standard, which is usually stated in number of employees or average annual receipts, represents the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and federal contracting programs. The definition of ‘small’ varies by industry.”
Yes. Generally, SBA requires collateral for EIDL’s over $5,000, but it will not reject an application if no collateral is available. If the loan request if $25K or less, no collateral will be required. Disaster Loans offer up to $2 million in assistance.
SBA offers loans with long-term repayments 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. There are other provisions with different payment terms. 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 nonprofits is 2.75%. You can obtain more information at https://www.sba.gov/disaster-assistance/coronavirus-covid-19
To start the application, you need to either apply online or by mail. Additional information may be necessary to process your application, which you will need to provide within 7 days. Here is the list of documents that may be required to complete the application process:
These SBA Economic Injury Disaster Loans make up one piece of the federal government’s economic response to the crisis, and more details will be forthcoming as time goes on. Succentrix Business Advisors is committed to helping you navigate the uncharted waters currently being faced by the business community during the COVID-19 outbreak. Sign Up for our newsletter to be up-to-date with what’s available to small business owners and entrepreneur.
In addition, Congress is finalizing plans for a loan forgiveness program, which will provide businesses with additional payroll, sick time and family leave financial assistance.
If you want to discuss applying for one of these SBA loans for your business, please contact our office today so we can assist you in making the application process go smoothly.
© Succentrix of Gwinnett. Author Ronald Rayner, Operations Manager. March 26th, 2020