SBA to Provide Small Businesses With Disaster Assistance Loans Due to Coronavirus
Update: The CARES Act passed by the U.S. Senate on March 25, and expected to be voted on by the House on Friday, March 27, includes a Paycheck Protection Program. An applicant may not apply for a Paycheck Protection loan for the same purpose or same funds as the applicant has received from an Economic Injury Disaster Loan. We encourage you to consult with your legal or financial advisors to determine which program best suits your needs.
Update: As of March 21, 2020, small businesses located in all 50 states, the District of Columbia, and the U.S. territories of American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands are now eligible to apply for SBA Disaster Assistance.
On March 12, 2020, the Administrator of the U.S. Small Business Administration (SBA) announced that the SBA would work with state governors to provide targeted, low interest disaster recovery loans to certain businesses severely impacted by COVID-19. On March 18, 2020, the SBA declared that these disaster recovery loans would be available to non-profit organizations and small businesses. Small business owners in the following states are currently eligible to apply for this loan: California, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Indiana, Maine, Massachusetts, Montana, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Rhode Island, Utah and Washington. Visit the U.S. SBA Disaster Loan Assistance website for newly eligible states.
The loan amounts may be up to $2 million and the proceeds of the loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of COVID-19. The interest rate on such loans for non-profits is 2.75% and the interest rate for small businesses is 3.75%. The term of the loan could be up to 30 years, determined on a case-by-case basis, based upon each borrower’s ability to repay.
The attorneys in the Business Services Group of Bose McKinney & Evans are available to answer any questions and provide guidance to you.