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SBA Loans: Financial Assistance for Small Businesses

by Hannah Stiff | Mar 20, 2020 4:09:47 PM

Need Financial Help because of the coronavirus? Get the ball rolling on your low-interest Small Biz Disaster Loan today!

In these chaotic, confusing times, one thing is crystal
clear for businesses. They need help. And they need it now.

In a recent news conference, President Trump indicated he will funnel an additional $50 billion to the U.S. Small Business Administration to help businesses impacted by the coronavirus. Those low-interest loan funds will be divvied among businesses in impacted states and territories, according to the SBA.

Additionally, the SBA is
offering designated states and territories low-interest federal disaster loans
for working capital to small businesses “suffering substantial economic injury
as a result of the Coronavirus (COVID-19),” according to the SBA. The loans are
called Economic Injury Disaster Loans (aka EIDLs or working capital loans).
Government officials have indicated they will expedite the processing and
payouts of these loans to help businesses as soon as possible.

These working capital loans
can be used to pay fixed debts, payroll, accounts payable, and “other bills
that could have been paid had the disaster not occurred,” according to the SBA.
The EIDLs are not intended to replace lost sales or profit.

Both businesses
and nonprofits may apply for a disaster loan up to $2 million. Loan terms are
up to 30 years with a 2.75% interest rate for nonprofits and a 3.75% interest
rate for small businesses. Eligibility is based on a business’s size and
financial resources. Collateral is not required for loans $25,000 or
below. Specific loan terms are determined on a case-by-case basis and based upon
each borrower’s ability to repay.

There is no cost to apply for an SBA Economic
Injury Disaster Loan. EIDL funds come directly from the U.S. Treasury, not a
bank. 

Here are the basic criteria the SBA will consider when granting Economic Injury Disaster Loans:

  • Credit History – Applicants must have a credit history acceptable to SBA.
  • Repayment –SBA must determine that the applicant business has the ability to repay the SBA loan.
  • Eligibility – the applicant business must be physically located in a declared county or state and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons.

 Locally, many BBB partner organizations, like
the Prospera Business Network in Bozeman, help businesses apply for SBA loans. Suzi
Berget White, Business Development Director of Prospera, says typically it can
take months for disaster loans to be paid out, so it’s important that
businesses think ahead as much as possible. If your business will need
financial help because of the Coronavirus pandemic, do not wait to apply.

Here’s how to apply for an
SBA Economic Injury Disaster Loan:

More
information is available at  www.sba.gov/disaster.

Additionally, your Better Business Bureau is working hard to connect businesses with these funds to keep them afloat and solvent. We have many other resources to help businesses cope with COVID-19 at trust-bbb.org/coronavirus. Check back often for updated information, help and hope during these trying times.

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