The emergency supplemental appropriations bill enacted on March 6 deemed the coronavirus a “disaster” such that amounts included in the Small Business Administration (SBA)’s Disaster Assistance Loan Program, supported by $1 billion in loan subsidies, may now be utilized by small businesses and private non-profit organizations to obtain loans to cover financial losses incurred as a result of the ongoing emergency. Information on how SBA will implement this provision and grant loans of up to $2 million is provided here.
The loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t otherwise be paid as a result of the disaster. The interest rate is 3.75% for small businesses, with the interest rate for non-profits at 2.75%. SBA asserts that it offers loans with long-term repayments to keep payments affordable, up to a maximum of 30 years, and that the terms of each loan are determined on a case-by-case basis, depending on each borrower’s ability to repay.
Eligibility depends on whether each State’s Governor has requested this assistance from the SBA. States and counties whose businesses are now eligible to apply for the loans may be found here and, again, here. This list is being continually updated.
SBA has set the start of the relevant “incident period” at 1/31/2020 and continuing, with a closing date of 12/16/2020. The application process, which involves three steps, is described here.
One must submit the completed loan application and a signed and dated IRS Form 4506-T granting the IRS permission to provide the SBA with tax information. One may also apply in person at any SBA Disaster Recovery Center.
SBA usually makes a decision on an application within two to three weeks. If the decision is affirmative, SBA will send loan closing documents to the applicant for his or her signature.
Upon its receipt of the signed closing documents, SBA will normally, within five days, provide the applicant with an initial disbursement of $25,000.
The online application process begins here: https://disasterloan.sba.gov/ela/
The portal to apply is provided here: https://disasterloan.sba.gov/ela/Account/Login
With each passing day, we expect these grants to be made available in additional states and counties. Should you have any questions or desire assistance in submitting an application, Powers Counsel Kathleen Hatfield has significant expertise on this topic and can be reached at Kathleen.Hatfield@PowersLaw.com.