This article was updated on March 25, 2020. Updates to this article will be made as new information becomes available.
Schneider Downs continues to track the evolving landscape of financial programs offered to small businesses disrupted by the coronavirus (COVID-19). This is an overview and list of frequently asked questions (“FAQs”) in regards to Emergency Injury Disaster Assistance Loans (“Disaster Loan” or “EIDL”), as provided by the U.S. Small Business Administration (“SBA”) on their website www.sba.gov. Schneider Downs can assist with the EIDL application process and the documents necessary for these loans. For additional information on SBA Disaster Loans, see Michael Hart’s article on March 20, 2020: https://www.schneiderdowns.com/our-thoughts-on/small-business-disasterrelief-loan.
The SBA provided the following pieces of advice when applying for a Disaster Loan:
Once registered, download or print application.
If your application is incomplete, it will be set aside, and you will fall back into queue. So make certain that your application is complete.
If more funds are needed, applicants can submit supporting documents and a request for an increase.
If the loan request is denied, the applicant will be given six months to provide new information and submit a written request for reconsideration.
In the comments section of the EIDL application, you can request a specific loan amount.
Ignore the “credit elsewhere” statement in the EIDL application.
When checking the type of loan you are applying for, check only EIDL in the application process.
When in doubt, apply.
The SBA also provided the following FAQs in the Disaster Loan process:
Specifically, resources were provided by the West Virginia District Office of the SBA at:
How long will it take to know if I am approved for a loan?
The SBA is processing applications as soon as possible.
Does the SBA have any grants available to small businesses?
No, disaster assistance is in the form of federal low-interest, long term loans.
Can the SBA refinance my loans or mortgages?
The SBA economic injury disaster loan funds cannot be used to refinance pre-existing debt.
I have an existing SBA Disaster Loan from a previous disaster, what are my options?
Borrowers of home and business disaster loans from previous disasters that are still being paid back will now have their payments deferred through the end of 2020. This deferral will be automatic, and borrowers of previous home and business disaster loans do not have to contact SBA to request this deferment.
What banks are authorized to offer these economic injury disaster loans?
The SBA offers direct loans through its EIDL program. Traditional SBA backed loans are still available via banks as well. To find an SBA-approved lender, visit www.sba.gov/lendermatch.
Our nation now has a declared national emergency; why is the funding only for no-credit elsewhere firms?
Currently, the SBA is limited by statute to only provide loans to small businesses that do not have access to credit elsewhere.
I understand $2M is the limit a small business can get. Is this enough to keep them afloat?
Every small business is unique, and SBA’s EIDLs are available to be used to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact. The first payment on the economic injury loan issued due to the coronavirus will be automatically deferred for one year.
How does a business define an impact and/or loss for this? Is there a percentage, dollar amount, etc.?
A business needs to define its loss in comparison to its 2019 operations/financials. Losses will be compared to the effective incident period starting on January 31, 2020. Just a loss needs to be reported; there is no threshold of a percentage or dollar amount.
If a business currently has an SBA-backed loan and, it fears it will not be able to make the payments, what course of action should it take?
Borrowers of home and business disaster loans from previous disasters that are still being paid back will now have their payments deferred through the end of 2020. This deferral will be automatic, and borrowers of previous home and business disaster loans do not have to contact the SBA to request this deferment.
SBA is granting small businesses who receive an EIDL due to the coronavirus an automatic one-year deferment period before they are required to start making payments. Small businesses with other SBA-backed loans should first talk to their SBA lender about potential deferments of loan payments.
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The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].
Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.