The U.S. Small Business Administration is offering Economic Disaster Loans in affected states to provide working capital to small businesses during coronavirus-related economic disruptions.
Loans are available to “small businesses, small agricultural cooperatives, small aquaculture businesses and most private non-profit organizations”, in declared disaster areas, which include all of New England, according to a presentation by Conference telephone call from the Small Business Administration on Tuesday.
The presentation was part of a special coronavirus topic conference call series sponsored by the U.S. Department of Commerce in partnership with the Connecticut District Export Council.
“The number one message to small businesses is that there is help here,” said Amy Bassett, district manager of the Small Business Administration Maine district office, who led the session with Diane Sturgeon, deputy manager. office district.
The SBA’s definition of a small business varies by industry and is calculated either by average annual revenue or by the number of employees.
Basset said the intent of Economic Disaster Loans, also known as EIDL, is to provide working capital to businesses impacted by COVID-19.
“The loans are intended to help businesses cover payroll, fixed debt payments, accounts payable, rent, utilities and other bills that could have been paid had the disaster not occurred. “, she said. “The loans are not intended to replace lost sales or profits or for expansion. It is not designed to refinance debt, purchase equipment or purchase a business.
Eligible entities can benefit from loans of up to $2 million. The interest rate is 3.75% for small businesses and 2.75% for nonprofits, with terms up to 30 years. … Interest rates are fixed for the term of the loan. Loans over $25,000 require collateral.
“To apply, the company must be able to demonstrate that it was directly impacted by this disaster,” Bassett said. “The company must show that its industry has been affected and that it has been harmed by the losses in its communities.”
Unlike other SBA loans made through a bank, this is a direct SBA loan through the US Treasury Department, Bassett explained.
“The loan is based on repayment capacity, so once the application is received, the SBA will determine that the applicant has the capacity to repay this loan,” she said. “This loan projects expenses throughout the period of the disaster to determine the loan amount.”
There is an automatic deferral period of 12 months before any payments are due, although interest accrues during this period.
“This deferral period is designed to give businesses more time to recover and get back on their feet so they can make payments,” she said.
The company must have a “tangible and significant” physical presence in the declared disaster area. Economic presence alone or simply having a post office box in the disaster area would not be considered physical presence.
There is no cost to apply and there is no obligation to take the loan if offered. Applicants may have an existing SBA disaster loan and still be eligible for an EIDL.
Religious organizations and charities are not eligible for EIDL, nor are gambling businesses, including casinos and racetracks.
The applicant may ask for more than what is offered. Once the loan is granted, the applicant can return in six months to seek further assistance. If the loan application is not approved, the applicant has six months to provide additional documents to request a reconsideration. Applicants can also defer the loan for six months once the loan is approved.
On March 17, the Small Business Administration released a revised version Criteria for states requesting an economic injury declaration that relaxed previous requirements and made assistance available statewide, as opposed to specific counties identified as disaster areas.