As part of the impact from the COVID-19 outbreak, the Federal Government in conjunction with the Small Business Administration will be working with state Governors to provide targeted, low-interest disaster recovery loans to small businesses that are being severely impacted by the ongoing pandemic. The SBA has created an Economic Injury Disaster Loan which will offer up to $2 million in assistance for small businesses. These loans will provide much needed economic support to small businesses to help them overcome the temporary loss of revenue that they may experience during this difficult time.
In order to access this SBA COVID-19 disaster relief lending, the SBA is offering designated states and territories low-interest federal disaster loans for working capital needs to small businesses. A state’s Governor must request from the SBA assistance and then the SBA will issue, under its own authority, an Economic Injury Disaster Loan declaration to the states.
The Economic Injury Disaster Loan assistance declaration will allow the SBA to make loans available to small businesses and non-profit organizations. These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of this disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible for these loans. The interest rate for non-profit organizations will be 2.75%. These loans have long-term repayments in order to keep payments affordable and can be offered up to a maximum of 30 years. Terms will be determined on a case-by-case basis and based on each borrower’s ability to repay.