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This article was updated on March 24, 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 a summary of the U.S. Small Business Administration (“SBA”) loan process and documents needed to apply for an SBA loan, prior to any of the new legislation passed by the federal government as a result of COVID-19. Schneider Downs can assist with the application process and the documents necessary for these loans.
Overview
The SBA works with lenders to provide loans to small businesses. The SBA doesn’t lend money directly to small business owners. Instead, it sets guidelines for loans made by its partnering lenders, community development organizations, and micro-lending institutions. The SBA reduces risk for lenders and makes it easier for them to access capital, which makes it easier for small businesses to get loans.
Benefits of SBA-Guaranteed Loans
SBA-guaranteed loans generally have rate and fees that are comparable to non-guaranteed loans. Additionally, some loans have lower down payments, flexible overhead requirements and no collateral requirements. The SBA also offers continued support with some loans.
Loan Amounts and Business Purpose
The 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses and this program is currently being proposed as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.
Eligibility Requirements
Lenders and loan programs have unique eligibility requirements, remembering that these requirements may change with the final version of the CARES Act. Generally, eligibility prior to the CARES Act is based on the following:
Application Process
The SBA loan application process works as follows:
Brief Checklist before Meeting with a Lender
Before meeting with a lender and prior to any changes in the CARES Act, a business should have the following information or documents ready for a 7(a) loan application:
These documents are not necessary for an SBA Disaster Loan and may not be necessary for loans under the CARES Act.
Please contact Schneider Downs if you have questions regarding the documents needed for the SBA loan process.
Also, visit our Coronavirus resource page at www.schneiderdowns.com/our-thoughts-on/category/Coronavirus for additional related content.
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