On March 6, 2020, President Trump signed the Coronavirus Preparedness and Response Supplemental Appropriations Act, which provides for emergency supplemental appropriations in the amount of $8.3 billion to address issues caused by the coronavirus outbreak. As part of this Act, the Small Business Administration (“SBA”) was authorized to provide disaster assistance loans on a state-by-state basis.
Small business owners in the following designated states are currently eligible (as of March 20, 2020) to apply for a low-interest loan due to Coronavirus (COVID-19): Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia
About SBA Disaster Loans
- Small Business – Any company with less than 500 employees is considered a small business by the SBA which will allow them to apply for Economic Injury Disaster Loan assistance.
- Physical Damages – As a business of any size, up to $2 million for physical damages;
- Expected Terms – Loans up to $2 million, 3.75% rate (2.75% for nonprofits), maximum term 30 years (determined on a case by case basis)
- Deferment on Principal – Potential for a 1 year deferment on principal. Legislation currently pending in the US Senate may affect deferment, or allow for loan forgiveness under certain circumstances.
- Allocation of funds – These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
Businesses seeking disaster loan assistance may apply online, in-person at an SBA disaster center, or by mail. The loan process includes an SBA credit review followed by SBA verification of loss due to the disaster. The underwriting process will look at the borrower’s creditworthiness but there is more flexibility now due to the outbreak. Repayment ability will be based on pre-disaster cash flow.
The SBA’s goal is to provide a determination within 2-3 weeks from receipt of an application. Once an application is approved, the SBA will disburse initial loan funds of $25,000 for physical damage and $25,000 for economic damage within 5 days of approval. The loan may later be increased due to additional damage or decreased if insurance proceeds are received.
For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail firstname.lastname@example.org
More information can also be found on the SBA website