The SBA offers low-interest Coronavirus Small Business Loans through their disaster loan program.
The American economy continues to suffer the devastating effects of the COVID-19 health crisis, with small businesses bearing the brunt of the blow. As lives continue to be disrupted via social distancing and lockdowns nationwide, small businesses such as restaurants and retail are having to temporarily shut down due to “supply chain failures”, reduced or eliminated traffic, which also means an interruption of cash flow.
Thankfully, the U.S. Small Business Administration or SBA has historically provided fully federally-funded Economic Injury Disaster Loans (EIDL) to all businesses that have been directly impacted by natural disasters or other related emergencies.
Jovita Carranza, SBA chief, announced that the SBA will “will work directly with state Governors to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation.”
Who Is Eligible To Apply For a Coronavirus Small Business Loan?
This loan was developed to serve small businesses and small agricultural cooperatives who have experienced significant economic loss due to the Coronavirus pandemic. One important requirement to qualify for this loan is that these aforementioned businesses must be unable to receive alternative funding. However, businesses are not allowed to apply for these loans independently, instead, local county and state officials must work with the SBA to make a declaration of disaster for their area. Only after this occurs can businesses apply for this type of loan.
How To Apply For The Coronavirus Small Business Loan
Here are the steps to applying for the Coronavirus Small Business Loan:
- Apply For a Loan: You have three options for applying for this loan: a) online using the website disasterloan.sba.gov/ela, b.) in-person at a disaster center (although this option is currently unavailable given the circumstances), c.) by mail.
- Property Is Verified and Loan Decision Is Made: The SBA will review your existing credit before they begin an inspection to validate your losses. An SBA verifier will be assigned to provide an estimate of the total physical loss to your “disaster-damaged” property. After reviewing any insurance or recoveries, a loan officer will determine your eligibility. The SBA can still issue you a loan even though your insurance recovery is pending. The loan officer will work closely with you to gather all the necessary information needed to reach a decision. The SBA’s goal is to reach this decision between 2-3 weeks. The loan officer will be in contact to talk about the loan recommendation and what to do next. You will receive the loan decision in writing.
- Loan Is Closed And Funds Disbursed: Once the decision has been made, the SBA will send you the Loan Closing Documents to get your signature. As soon as they receive the signed Loan Closing Documents, the first disbursement will be issued to you within 5 days. For Physical Damage, the funds will be $25,000. For Economic Injury, it will be $25,000 (as well as the Physical Damage disbursement).
You will be assigned a loan officer to assist you to meet all your loan conditions. They will also work with you to schedule the remaining disbursements until you receive the full amount.
Some government organizations do take some time to update their websites to reflect the latest developments on the pandemic crisis and how it affects its loan offerings. However, continue to visit the SBA website often for any changes and/ or see what other loan programs will best suit your business.