SBA Economic Injury Disaster Loan

As businesses deal with the economic fallout of Covid-19, The US Small Business Administration (SBA) is working overtime to provide Economic Injury Disaster Loans (EIDL):

• Loans Up to $2 million
• No payments for 12 months
• Small business and private non-for-profits are eligible
• May be used for fixed debts, payroll, accounts payable, and other affected bills
• 75% interest rate for small businesses without credit available elsewhere; available elsewhere are not eligible
• 75% for private non-profits
• Long-term repayments for Covid-19 crises will be 30 years
• No cost to apply
• No obligation to take the loan (if offered)
• The amount should reflect 6 months operating expenses (if you decide not to take the loan you have 6 months to change your mind)
• Existing SBA loans are ok:
  • An applicant can have an existing SBA Disaster Loan and still qualify
  • An applicant can have other existing SBA Loan (7a, 504, etc.) and still qualify
  • Loans CANNOT be consolidated
• Collateral:
  • Required if over $25,000
  • SBA will not decline for lack of collateral but requires the pledge of what is available
  • Real estate when available

What businesses or not-for-profits are ineligible?

• Any business where gambling is more than 1/3 of annual gross
• Casinos & racetracks where their purpose for being is gambling
• Businesses of a “prurient” sexual nature
• Pawnshops if more than half of their income derives from interest
• Religious organizations
• Investment or lending companies
• Charitable organizations (private non-profits are ok)
• All speculative activities
• Agriculture enterprises (New York State has specific loans for agriculture)

What are the criteria for approval?

• Credit history acceptable to SBA
• Businesses must exhibit the ability to repay the loan. Were obligations current as of January 31^st?
• Businesses must be located in a declared state and suffered working capital losses due to the Covid-19 disaster.

How to apply:

• Go to https://disasterloan.sba.gov/apply-for-disaster-loan/index.html and follow instructions
• Or, download and complete all forms and mail them to:

US Small Business Administration

Processing and Disbursement Center

14925 Kingsport Rd.

Ft. Worth, TX 76155

• Clear browser cache before applying online
• Customer service can be reached at:
  • 800-659-2955
  • disastercustomerservice@sba.gov
  • TTY: 800-877-8339

Please note:

• On all forms “damaged property” refers simply to your primary location for the operations of the business.
• On form 5 skip box 15, as this only applies to property damage loans.
• There is no specific location to input a requested loan amount. The loan amount is determined by the supporting documents and any other relevant financial information provided that substitutes economic injury
• All owners with 20% or greater ownership in the business must be included in the application.
• After submitting a form you MAY be asked for:
  • Completed IRS form 4506-Ts:
    • Owner
    • Each principal that owns 20% or more
    • Each general partner or managing member
    • Each owner that owns over 50% of an affiliated business
  • Up to two years complete business tax returns with all schedules
  • Personal financial statements
  • Monthly sales figures (SBA form 1368)
  • A current year to date profit and loss statement
• Complete and submit everything required because delays occur due to missing or incomplete information
• If more funds are needed you can submit supporting documents and request an increase. If fewer funds are needed you can request a reduction
• If denied you will be given up to six months to provide new information and a written reconsideration request

Forbearance on existing SBA loan:

• 7(a) loans and microloans
  • Lenders may help with temporary cash flow issues by deferring payments up to six consecutive months (unless guarantee has been sold, in which case ninety days)
  • For microloans, up to six consecutive months
  • Deferments may not cause the loan to extend beyond the maximum six-year maturity
• 504 loans
  • CDCs may help with temporary cash flow issues by deferring payments
  • Up to six consecutive months or 20% of the original loan amount, whichever is less

There is local assistance if needed at www.nysbdc.org for all Small Business Development Centers in New York.

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