On January 30, 2020, the World Health Organization (WHO) declared a global health emergency over novel coronavirus, known as COVID-19. The virus has infected large amounts of people worldwide, with confirmed cases on every continent but Antarctica. The outbreak has caused global supply-chain disruption, with small firms that rely on Chinese imports struggling with the economic fallout. Further, small businesses, like restaurants and tourism companies, are being impacted by the spread of misinformation and xenophobia. On March 4th, Congress passed an $8.3 billion dollar supplemental for efforts to combat the virus. The measure included a provision that enables the Small Business Administration (SBA) to make an estimated $7 billion in low-cost loans to affected small businesses. On March 27th, Congress passed the bipartisan CARES Act which provides more than $376 billion in relief for struggling small businesses, mainly in the form of forgivable payroll loans, disaster grants, and debt relief for current borrowers. Impacted small business owners are advised to visit the SBA's website for more information on how to apply for a disaster loan.
Information about the SBA Paycheck Protection Program
The CARES Act established a new guaranteed loan program at SBA for small businesses to cover payroll during the immediate crisis. The Paycheck Protection Program:
•Supports $349 billion in 100 percent guaranteed, low interest, no fee loans of up to $10 million with repayment deferred for at least six months
•Forgives up to 100% of the loan if the borrower has retained the same number of employees as when they received the loan.
Who is Eligible?
Small and Medium sized businesses up to 500 employees, non-profits, independent contractors and the self-employed. This includes churches but only to cover payroll costs of an associated business, like a thrift store.
How are Loans Made?
The SBA’s network of 2,500 7(a) lenders will be used to process these loans. There is also authority to fast track additional lenders to process and disburse these loans to reach as many small businesses as quickly as possible.
For more information about navigating the Paycheck Protection Program, click here.
Information on SBA Economic Injury Disaster Loans:
Process for Accessing SBA’s Coronavirus (COVID-19) Disaster Relief Lending
- The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
- Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the Coronavirus (COVID-19).
- SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
- Once a declaration is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on our website: SBA.gov/disaster.
- SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance per small business and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- 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; 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.
- SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.
- To apply for SBA COVID-19 EIDLs, click here. For additional information, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail email@example.com.