Here are a few things we’ve recently learned about the Small Business Administration Economic Injury Disaster Loan Program.  We will lay out very brief bullet points about some of the particulars below.  But the bottom line is, the SBA wants to get money into the hands of small businesses, and they are bending over backwards to get it to you.  Requirements have been relaxed, processes have been streamlined.  Their advice is, if you’re not sure if you qualify, apply and a loan officer will work it out with you.

At the same time, Congress is still working on additional forms of assistance and/or expansion of the existing loan program.  Better options might become available as time goes on.  Consider holding off if you can, so you can evaluate which form of assistance will best meet your needs.  If you do apply now however, you are not obligated to accept the loan as soon as it’s approved, so you can get the process going and make a final decision when more information becomes available.

Selected quick points for your reference:

• No application fees
• These are working capital loans of up to $2 million.
• Proceeds are intended to pay fixed debts, payroll, accounts payable and other bills that can’t be paid; they are not intended to replace lost profit/revenue per se, nor for fixed asset purchases in most cases.
• Eligibility requirements are very loose. You must be able to demonstrate economic injury, either current or reasonably anticipated (who can’t?!)
• On the surface there is a requirement is that credit is not available elsewhere, but that is much more lenient than it appears; if you have an existing line of credit or might possibly get a commercial loan, that doesn’t make you ineligible. SBA will consider your current resources available in house.
• Interest rate is 3.75%, repayment terms may be as long as 30 years, the first payment is automatically deferred for one year (but interest will accrue); no early payoff penalties.
• Collateral is generally not required for loans of $25,000 or less; over that they usually require real estate as collateral, but in this situation they will only file a general security interest lien to speed the process.
• When you apply, ignore any questions related to physical damages or loss, submit the application as an economic injury only.
• Businesses which began in 2019 are eligible and can apply, but will probably have to provide additional information, such as current personal and business financials.
• Franchise businesses are eligible
• There are technical standards within each NAICS industry code as to what constitutes a “small business,” but for this emergency SBA is accepting self-certification.
• This is still a LOAN program. However, Congress is considering various possibilities which might include converting it to a grant program, forgiving loans used to cover payroll, reducing interest rates to as low as zero, or other possibilities.  Stay tuned!

We will continue to send updates and details on this program, the Family First act Congress passed last week, and new developments as information becomes available.