Low-Interest Loans for Small Businesses Hit by COVID-19
The aviation industry will be challenged by Covid-19. Many of the companies that will experience significant short-term challenges are small businesses, and small businesses often have more limited options when it comes to accessing short-term capitol in challenging times. In response to this concern, Congress passed additional authority for SBA to make loans to those affected by Covid-19, and the Small Business Administration announced that it will be making capitol available in the form of low-interest federal disaster loans.
What Can I Use The Loan For?
The loans are intended to be used for working capita. Examples of things you can do with the loan-money include:
- paying fixed debts
- making payroll
- paying accounts payable
- paying any other bills that cannot be paid because of the impact of COVID-19
Loan amounts are set based on economic injury and the needs of your business.
What About Repayment?
SBA loans are available with long repayment terms in order to keep payments affordable. In some cases, payments can be spread out over a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
(Some of) The Fine Print
The interest rate is 3.75% for small businesses without credit available elsewhere and 2.75% for nonprofits. Businesses with credit available elsewhere are typically not eligible for this program.
Your state has to qualify for federal funds. A state must submit documented business losses for at least five businesses per county to qualify for the program.
Funding comes from the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Trump.
These loans appear to have a cap of $2 million.
I Need This Loan – Who Do I Contact?
Unlike many other SBA loans which are guaranteed, but not issued, by SBA, disaster assistance loans can be obtained through an online application process on SBA’s website. For additional information about these loans, you can 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 (link sends e-mail).
What Else Should I Do?
The disaster declaration just happened on Friday afternoon so the SBA doesn’t even yet have Covid-19 listed as a formal disaster declaration on their website (but SBA has issued a press release confirming Covid-19 assistance, and also has a Covid-19 information page). In order to recognize your state as a formal disaster area, your state will need to apply. Some states have already started gathering information in support of such an application. Work with your state to get them.