The Small Business Administration has authorized Economic Injury Disaster Loans of up to $2 million in assistance to help small businesses, private nonprofit organizations of any size, small agricultural cooperatives and small aquaculture enterprises in most states and territories that have been financially impacted as a direct result of the coronavirus (COVID-19) since January 31, 2020.
In addition to the increased funding that was provided by Congress in the most recent legislation, Congress is also considering additional provisions and additional funding related to the SBA programs. These provisions would be part of the massive stimulus bill that is still under consideration in Congress, but if the bill passes it is likely to include substantial changes to and expansions of the SBA loan programs.
We will provide an update as soon as Congress finalizes the stimulus bill.
In the meantime….
How to Apply for Economic Injury Disaster Loans
To apply: https://disasterloan.sba.gov/ela/
The deadline to apply for an Economic Injury Disaster Loan is December 21, 2020.
Summary of the Economic Injury Disaster Loans known terms to date:
- Loan Amount Limit: Up to $2,000,000 limited to the economic injury determined by SBA, less recoveries from insurance and other sources.
- Use of Proceeds: These loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact.
- Credit Requirements: Applicants must have a credit history acceptable to SBA and show the ability to repay debt.
- Interest Rates: The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 3.750 percent.
- Loan Terms: The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
- Loan Eligibility Restrictions: Applicants who have not complied with the terms of previous SBA loans may not be eligible.
Refinancing: Economic injury disaster loans cannot be used to refinance long term debts.
Other programs will likely be available to companies in connection with any coronavirus stimulus packages that are passed by Congress.
The SBA has set up a resource page
to help companies during this difficult time that is updated regularly.
Included in this page are guidelines for businesses, SBA products and resources to help with loans, access to capital, exporting assistance, government contracting assistance and local assistance. For additional information from the SBA, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail firstname.lastname@example.org
This program is new and emerging and every day we receive more information on the specifics of the program. Please contact a member of the DLA Corporate team or your DLA Piper relationship attorney if you need help determining if you are a small business or have any other questions.