Small Business Administration economic injury disaster loans are now available in Tennessee. The SBA Friday, March 20th, accepted Gov. Bill Lee’s certification that Tennessee small businesses are facing substantial economic harm from the COVID-19 pandemic. With this certification, Tennessee small businesses that are directly or indirectly affected by the COVID-19 pandemic are eligible to apply for SBA economic injury disaster loans of up to $2,000,000 at an interest rate of 3.75%. Loans are also available to many nonprofit organizations at an interest rate of 2.75%. Loans can have terms of up to 30 years.

Here are answers to important questions about SBA economic injury disaster loans:

Q: How can the loan funds be used?

A: The SBA loans are working capital loans that can be used to pay fixed debts, payroll, accounts payable, and other bills. The loans are not intended to replace lost sales or profits or for expansion.

Q: Are there collateral requirements?

A: Economic injury disaster loans over $25,000 require collateral. SBA prefers real estate as collateral, but states that it will not decline a loan for lack of collateral so long as borrowers pledge what is available. 

Q: What kind of businesses can apply?

A: Small businesses that have suffered economic injury caused by the COVID-19 pandemic.

Q: What is a small business?

A:  The SBA small business size standards vary for different kinds of businesses. Businesses are classified by North American Industry Classification System (NAICS) code. You can check whether your business is a small business by using the SBA Size Standards Tool available at https://www.sba.gov/size-standards/.

Q: Are there any businesses that are not eligible?

A:  Yes. These include agricultural enterprises, religious organizations, and certain other organizations such as government-owned nonprofit entities.

Q: Does the business have to be physically located in Tennessee? 

A: The business has to be located in a state where a COVID-19 economic injury disaster has been declared. In addition to Tennessee, both Georgia and North Carolina are eligible areas as of Friday, March 20. Counties in Alabama adjacent to Tennessee and Georgia are also currently eligible. 

Q: How does the business apply for a loan?

A: The SBS strongly encourages businesses to apply online at https://disasterloan.sba.gov/ela although a paper application can be submitted.

Q: Where can I get paper applications?

A: https://disasterloan.sba.gov/ela/Information/PaperForms

Q: What do applicants have to submit to the SBA?

A: Information required includes:

• Completed SBA loan application (SBA Form 5 or 5C)
• Tax information authorization (IRS Form 4560T) for the applicant, principals, and affiliates
• Complete copies of the most recent federal income tax return
• Schedule of liabilities (SBA Form 2202)
• Personal financial statement (SBA Form 413)

Q: What other information may be requested?

A: The SBA may also request:

• Federal income tax returns for principals, general partners, managing member, or affiliates of the applicant business
• If the return for the most recent year has not been filed, a year-end profit and loss statement and balance sheet for that year
• Current year to date profit and loss statement
• Monthly sales figures (SBA Form 1368)

Q: When should applications be submitted?

A: Applications should be submitted as soon as possible, due to anticipated high volume. Be sure that all filing requirements are completed to avoid delays and rejected filings.