The U.S. Small Business Administration (SBA) recently announced that it 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 SBA, “[u]pon a request received from a state’s or territory’s Governor, SBA will issue under its own authority . . . an Economic Injury Disaster Loan declaration.” The SBA was authorized to issue such loans by the Coronavirus Preparedness and Response Supplemental Appropriations Act signed by President Trump on March 6, 2020. The SBA’s announcement goes on to state:
- “Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the Coronavirus (COVID-19).”
- “SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.”
- Once an Economic Injury Disaster Loan declaration “is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities as well as updated on [SBA’s] website: SBA.gov/disaster.”
- SBA’s Economic Injury Disaster Loans “offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.”
- SBA’s Economic Injury Disaster Loans “may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.”
- The interest rate on these loans is 3.75% for small businesses and 2.75% for non-profits.
- SBA offers loans with “long-term repayments in order to keep payments affordable, up to a maximum of 30 years.”
- The “[t]erms [of the loans] are determined on a case-by-case basis, based upon each borrower’s ability to repay.”
Bradley’s COVID-19 task force will continue to monitor and report on this noteworthy development.
