On Friday, March 20th, the Small Business Administration (SBA) issued a disaster declaration meant to help businesses in light of the COVID-19 (Coronavirus) outbreak across the United States. In Kentucky and the commonwealth area, businesses can now apply for an Economic Injury Disaster Loan. The following are some highlights for the program and a link to see if your business qualifies.
What is the Economic Injury Disaster Loan Program (EIDL)?
- The SBA provides low-interest disaster loans to help small businesses suffering substantial economic injury as a result of a declared disaster. In this case, the COVID-19 outbreak. Applicants must establish that the claimed economic injury is substantial and is a direct result of the declared disaster. Substantial economic injury generally means a decrease in income from operations or working capital with the result that the business is unable to meet its obligations to cover ordinary and necessary operating expenses in the normal course of doing business.
How much can the SBA offer in assistance for my business?
- The EIDL program offers up to $2 million in assistance and can provide important economic support to help loss in revenue that your small business may be experiencing.
How do I know if my business qualifies for the loan program?
- Small business owners in the U.S., Washington D.C., and territories are eligible to apply for a long term low-interest loan due to COVID-19. Companies must be located in a declared disaster area. Kentucky was named a disaster area effective January 31, 2020. The disaster area declaration can be found here. Click here for further explanation about the process.
How do I know if my business is considered a “small business”?
- If you are unsure if your business qualifies as a “small business”, the SBA offers guidance in an online format found here: https://www.sba.gov/size-standards/. This will take you step-by-step through the process to determine if your business is considered a “small business” by SBA standards by calculating annual receipts and including the number of employees, among other elements.
What can I use the loan for once I am approved?
- It can be used to help pay fixed debts, payroll, accounts payable and other bills that businesses can’t pay during the COVID-19 outbreak.
What are the details of the loan program?
- The interest rate is 3.75% for small businesses and 2.75% for non-profits. They offer loans with long-term repayments in order to keep them affordable, up to a maximum of 30 years. The terms are determined on a case-by-case basis, based on each borrower’s ability to repay.
How do I apply for the program assistance?
- Go to the Small Business Administration website. https://disasterloan.sba.gov/ela/ and apply online. If you have already applied for assistance, you can check the status of your application at that page, as well.
Are there other ways to get financial help due to the Coronavirus?
- The Small Business Administration also offers an Express Bridge Loan Program. This is intended to offer expedited loans up to $25,000 to small business for up to 6 months after a federally declared disaster. They are offered to borrowers on 7-year terms and can be repaid with the proceeds of a larger SBA disaster loan.
Baldwin is here to help you and your small business in any way that you may need. If you have questions about your small business or need help to apply, please contact us. Email us or call us at 1-866-287-9604.
