The U.S. Small Business Administration (SBA) is offering low-interest disaster loans for small businesses suffering substantial economic injury as a result of the novel coronavirus (COVID-19). Economic Injury Disaster Loans (EIDLs) are for small businesses affected by disaster to meet their needs for working capital or normal business operating expenses, and businesses are eligible whether or not they have suffered property damage.
The SBA’s EIDL program provides businesses with loans of up to two million. The SBA 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 is 3.75% for small businesses and 2.75% for non-profits. The SBA offers loans with repayment terms of up to thirty years, and the terms are case-by-case depending on the business’ ability to repay the loan.
In order for small businesses to be eligible for a disaster loan, the SBA must first issue a disaster declaration for their area. The SBA has already issued a coronavirus disaster declaration for Maryland, Virginia, and the District of Columbia. Once a disaster declaration is made for an affected area, a small business can apply for a disaster loan on the SBA’s website at disasterloan.sba.gov/ela/. The loan application requires small businesses to include, among other information, a personal financial statement, schedule of liabilities, and federal income tax returns. The SBA may request additional documentation before approval.
This correspondence should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult a lawyer concerning your own situation and legal questions.