Local communities depend on small businesses as the backbone for their economy, and with the rapid spread of COVID-19, many are faced with economic hardships. At KerberRose, we are working diligently to bring you the most up-to-date information and resources to help you and your organization continue to operate and thrive. Thankfully, there is good news for the community because small businesses are here to stay.
On March 17, 2020, the U.S. Small Business Administration (SBA) announced they will expand their Economic Injury Disaster Loan Program to small business and private, non-profit organizations affected by COVID-19. By waiving their normal disaster declaration process, these low-interest federal loans will be available statewide for current and future declarations related to Coronavirus.
Through the SBA disaster loan assistance program, small businesses with 500 employees or less are eligible to receive up to $2 million in funding. Loans are determined by actual economic injury and are tentatively at 3.75% interest rates and 2.75% for non-profits. Payment options are available for up to 30 years to keep it affordable for you.
Funds may be used for:
- Employee sick leave
- Accounts payable
- Pay fixed debts
- Other bills which cannot be paid due to disaster impacts
Funds may not be used for:
- Refinancing debts incurred prior to disaster events
- Making payments on other loans owned by another federal agency or the SBA
- Paying tax penalties or non-tax criminal/civil fines
- Repairing physical damage
- Paying dividends or other disbursements to owners or partners except as related to their performance of services for the business
In more recent updates, the proposed economic stimulus package for COVID-19 w ould offer substantial benefits to borrowers. For more information, see our follow-up article about this package.
Small businesses, private nonprofits, homeowners and renters can apply online for an SBA disaster assistance loan. If you have questions about the SBA Economic Injury Disaster Loan Program, contact a KerberRose trusted advisor today.
For more information, visit these links:
SBA Disaster Assistance in Response to the Coronavirus
Coronavirus (COVID-19): Small Business Guidance & Loan Resources
SBA Updates Criteria on States for Requesting Disaster Assistance Loans for Small Businesses Impacted by Coronavirus (COVID-19)
National Law Review: COVID-19 Economic Relief Opportunities for Small Businesses