While the coronavirus pandemic is an unprecedented global health crisis, it is also devastating the economy by stalling and shutting down businesses. Small businesses may not be as fiscally prepared for crisis as larger businesses and will feel the lasting effects of this emergency. There are over 30 million small businesses in the US which employ half the country’s workforce and pay 43 percent of total US. private payroll.
During his Oval Office address Wednesday night, President Trump announced some aid was on its way to small business and non-profits. “I am instructing the Small Business Administration to exercise available authority to provide capital and liquidity to firms affected by the coronavirus,” Trump said. “Effective immediately, the SBA will begin providing economic loans in affected states and territories. These low-interest loans will help small businesses overcome temporary economic disruptions caused by the virus. To this end, I am asking Congress to increase funding for this program by an additional $50 billion.”
The Small Business Association (SBA) announced yesterday that they are providing disaster assistance loans to small businesses affected by the coronavirus.
SBA Administrator Jovita Carranza said in a news release, “Our Agency will work directly with state Governors to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation.”
Affected small businesses will have the option to avail of the low-interest loans to help pay debts, manage payroll, accounts payable, and other bills that can’t be settled due to the virus. Interest rates for these relief loans are 3.75 percent for small businesses and 2.75 percent for non-profit organizations. The loans will have the option of long-term repayments with a maximum of up to 30 years.
“The SBA continues to assist small businesses with counseling and navigating their own preparedness plans through our network of 68 District Offices and numerous Resource Partners located around the country,” Carranza added.
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.
- 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 percent for small businesses without credit available elsewhere; businesses
with credit available elsewhere are not eligible. The interest rate for
non-profits is 2.75 percent.
- 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.
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 protected](link sends
e-mail).
Have any questions you need answered about small to midsize businesses (SMB)? Subscribe to PCMag’s Small Business Newsletter and join the [email protected] business community on LinkedIn, and you can ask vendors, other professionals like yourself, and PCMag’s editors.
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