While the coronavirus outbreak creates chaos throughout many sectors of our economy, small businesses specifically, are carrying a substantial burden.
As the administration is developing relief packages that will, with fingers crossed, lift some of this financial strain, some are also going to other loans managed by the Small Business Administration.
The SBA’s Disaster Loan Program has a section called the Economic Injury Disaster Loan program, that may potentially help eligible small businesses, private non-profit organizations, and small agricultural associations.
On Monday, the SBA reported that it was going to defer existing current loan payments automatically to December 31, 2020.
Eligibility for the Small Business Disaster Loan
To be eligible for an SBA economic injury disaster loan, a business needs to prove significant economic injury – that it’s incapable of paying its normal and necessary operating costs. The loans point is to assist a business in riding out a disaster time until typical operations can continue – it applies to situations where no physical damage has occurred.
Businesses may secure up to $2 million, but their loan amounts are going to be based on an evaluation of genuine economic injury. As reported by the SBA, the interest rate on the loans won’t surpass 4% per year and terms won’t surpass 30 years.
Take note of the materials you need to have prepared to apply, as drafted by tax, accounting, and business consulting firm Blum Shapiro.
- Employee Identification Numbers
- The establishment date
- Contact lists for Loss Verification Inspections
- Number of years under present management
- Personal details comprising of dates of birth, SS numbers, percentages of ownership and cell/phone numbers for each of the owners of the business
- Additional details are required to be presented if any of the business’ owners have more than a 50% stake of ownership in a separate business
- Personal financial statements are required to be complete for each of the owners
- The debt totals
- The value of personal property, receivables, and capital
- The amount of liabilities that you’re conditionally liable for (for instance what’s the dollar amount of loans that you ensure)
Lea, Brittany De. “Coronavirus Small Business Disaster Loan Relief: What to Know.” Fox Business, Fox Business, 23 Mar. 2020, www.foxbusiness.com/money/coronavirus-small-business-disaster-loan-relief-what-to-know.