SBA Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)
The U.S. Small Business Administration (“SBA”) is offering low-interest federal disaster working capital loans to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).
Important Items to Note
Before beginning the SBA loan application process, it is important to verify that you qualify as a “small business”. You can check whether your business is small by using the SBA Size Standards Tool. Size is measured by the number of employees or average annual receipts.
While this program is available to any and all small businesses that are in need of credit, it is also important to recognize that this program is only available if a business is unable to access credit on reasonable terms through traditional lending channels, such as lines of credit.
SBA Disaster Assistance Loans FAQ Sheet
- Loan sizes up to $2m
- Loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid because of the disaster’s impact
- The interest rate is 3.75% for small businesses and 2.75% for non-profit organizations
- Loan repayment terms can be as long as 30 years, but generally no longer than 10 years (based upon each borrower’s ability to pay)
- Collateral is required (unless loans are less than $5,000)
The SBA Disaster Assistance Loans Application Process
The steps, documents, and general information required for the online loan application process are summarized as follows:
- General information for the business
- General information for the owners, partners or shareholders of the business
- Personal financial statements
- Schedule of liabilities
- Complete copies of tax returns for 3 years (including authorization for the SBA to request transcripts of your tax returns from the IRS)
It is important to note that the online loan application process, while fairly streamlined and straight-forward, is generally only the starting point in the process. Once the online application is submitted, additional documentation will likely be required to substantiate the following:
- The business has been negatively economically affected by COVID-19
- That you qualify as a “small business”, and
- That financing is not available elsewhere
Additional documentation might include projections of future cash flows that demonstrate the business’ ability to repay the SBA loan during the recovery period as the impact of COVID-19 begins to dissipate.
You can begin the online application process or check the status of your loan application here.
For additional assistance, please contact your Gettry Marcus Advisor, who will be able to provide additional guidance for the SBA disaster loan application process, as well as other programs that may be available to help you through these challenging times.