Pursuant to the Coronavirus Preparedness and Response Supplemental Appropriations Act, which was signed on March 6, 2020, businesses injured by the coronavirus pandemic may be eligible for Economic Injury Disaster Loans funded by the SBA. On March 17, the Administrator of the SBA announced guidance that made it easier for a state to be declared a disaster by the SBA and expanded businesses’ access to Economic Injury Disaster Loans in disaster areas.
Economic Injury Disaster Loans are designed to provide small businesses or non-profits with low interest rate loans of up to $2 million. 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. The interest rate is 3.75% for small businesses without credit available elsewhere; however businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%. SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
According to the March 17, 2020 guidance, Economic Injury Disaster Loans will now be available to businesses on a state-wide level, provided that the state has been declared a disaster by the SBA. The White House has tentatively allocated $50 billion to fund these loans in response to the coronavirus outbreak and has insisted the SBA implement processes to expedite the evaluation of applications.
To determine if you are eligible for an SBA loan, please contact your local SBA Office to determine if your state has been declared a disaster by the SBA, and initiate the application process. The application can also be completed online (located here).
As of March 17, 2020, the SBA has declared disasters from the coronavirus in 22 states. To see an updated list states declared disasters by the SBA, follow this link.