If you’re among those small business owners that need financial assistance because of the current coronavirus pandemic, you can apply for a business loan via the Small Business Administration’s loan program. The president of the United States has advised the SBA to made low-cost capital available to small businesses through the Economic Disaster Injury Loan program. Trump also asked Congress for an infusion of $50 billion in loans for businesses.
Most states have declared “disaster” due to the coronavirus pandemic and all affected businesses in that State can apply for business loans via the Economic Injury Disaster Injury Loan (EIDL) funds.
SBA Coronavirus Disaster Loan Program
With the SBA’s Economic Injury Disaster Loans of up to $2 million, small businesses can offset their temporary revenue losses because of coronavirus disaster. For non-profits, the interest rate is 2.75% on EIDLs and 3.75% for small businesses that have adequate cash available or can get funding from other sources to cover the costs at the loan terms of 30 years max. The repayment terms are typically based on the borrower’s loan repayment ability.
SBA directly lend the EIDLs to small business owners. Usually, the SBA does not lend loans directly to small businesses. The SBA partially guarantees loans that are made by their network of lenders through their SBA 7(a) and 504/CDC loan programs.
The SBA has made interest rates lower, and the legislation that advances funding to the SBA will perhaps make these loans even more affordable and widely available.
How to Apply for Coronavirus Business Loans?
The process of applying for Coronavirus business loans via the SBA is as follows:
The Economic Injury Disaster Loan assistance by the SBA to extend loans to small businesses, private nonprofit, homeowners and renter organizations in elected areas of a state to help relieve economic damage caused by the coronavirus pandemic.
The SBA Office of Disaster Assistance will interact with the state’s administrator to submit the application for the Economic Injury Disaster Loan.
The information on the process of applying for Economic Injury Disaster Loan will be provided to the affected communities along with updated on the SBA.gov/disaster after the declaration is made for designated State’s areas. With that said, if you need funding you’ve to ask your State governor who will officially request SBA’s Office of Disaster Assistance to obtain the funds.
For more information on the disaster loan program, and to check the listing of your state on the Declarations list, please visit the SBA disaster assistance website at SBA.gov/Disaster.
In order to stay current on the availability of funds, follow the SBA website, Disaster Loan Assistance website, and contact the disaster service center at 1-800-659-2955 or email at email@example.com
The Details: Coronavirus Business Loan Program
Congress is still adjudicating on how to distribute the $50 billion request made by President Trump to small business owners. The accurate details on how these EIDLs will vary from typical EIDLs for other disasters still need to be assessed. It is likely that business funding for affected businesses by COVID-19 will come from other SBA loan programs.
According to Senator Marco Rubio, the IMPACT for Small Businesses Act of 2020 would include authority for $50 billion in loans through the SBA 7(a) loan program for the rest of the financial year 2020, with provisions including (via NAGGL):
- Waiving upfront guarantee fees irrespective of loan size for all borrowers
- Waiving the lenders ongoing fee
- Increasing SBA 7(a) loans guarantee up to 90%
- Increasing Express maximum loan amount to $1 million from $350,000, and after 1 year, lowers the maximum loan amount to $500,000 rather than the existing $350,000.
- Increasing flexibility to the Economic Injury Disaster Loans (EIDLs)
With this added flexibility and guarantee, lenders are more likely to extend financing to small businesses, and waiving of fees will make the loan process inexpensive for small businesses. For funding up to $350,000, the legislation would also not require the borrowers to submit tax returns, making credit availability easier as well.
The bill has not passed yet, but businesses could still apply for funding through the EIDL program.
According to The SBA Business Stabilization Direct Loan Program Act of 2020, SBA can make no-interest business loans to affected businesses directly with repayment terms under 10 years and would not be denied due to inadequate collateral.
Keep in mind that the bill hasn’t passed as of in writing, and details are subject to change.
Expediting the Process of Coronavirus Business Loan
In order to apply for EIDL funding, counties are required to provide documentation on local businesses that have been affected by the Coronavirus pandemic to speed up the approval process.
Washington State has started providing the SBA’s Estimated Disaster Economic Injury Worksheet for businesses form on their websites. Review this Washington information sheet to acquire information on how to submit this form.
You can also check the availability of this form with your state and county websites. County officials will be assigned to submit these forms when requesting an EIDL declaration.
The Bottom Line
The influence of the coronavirus pandemic on small business community and society is rising daily. It still needs to figure out when things will settle down, and meanwhile, small businesses need every little assistance in the form of coronavirus business loans they can get to prevent the injuries felt by COVID-19.