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
- 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 31st?
- 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:
- TTY: 800-877-8339
- 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:
- 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
- Completed IRS form 4506-Ts:
- 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.