Accessing SBA’s Disaster Relief Loans as a Result of COVID-19: KSM Can Help
Update: This article has been updated with the latest guidance as of April 8.
The U.S. Small Business Administration (SBA) is offering states and territories low-interest federal disaster loans for working capital issued in amounts ranging from $25,000 up to $2 million to small businesses and not-for-profit organizations suffering substantial economic injury as a result of the coronavirus (COVID-19) outbreak.
How Does a Business Qualify?
While many factors go into qualifying for an Economic Injury Disaster Loan (EIDL), a primary one is that a small business (less than 500 employees) has to show they have a financial impact or loss directly associated to COVID-19.
How Can the Loans Be Used?
These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that otherwise could not be paid due to COVID-19.
What Is the Interest Rate and Terms of the Loan?
The interest rate is 3.75% for small businesses and 2.75% for not-for-profit organizations. Loan terms are for up to 30 years, structured with a 12-month principal and interest deferral. There are no prepayment penalties.
What Information Is Required to Apply for a Loan?
- Initial application process completed on the SBA’s website
Additional information that may be requested by the SBA:
- Completed application (SBA Form 5)
- Tax Information Authorization (IRS Form 4506T)
- Most Recent Federal Income Tax Returns for the Application Business (or an explanation if not available)
- Personal Financial Statement (SBA Form 413)
- Schedule of Liabilities (SBA form 2202)
- Acceptable credit history
- Federal tax returns for principals owning 20% or more of the business, for partners/managing members or affiliates (when owner has more than 50% ownership)
- Year-end financial statements for applicant if federal tax return has not been filed
- Interim financial statements
- Additional information may be required
Ready to Get Started?
KSM can help you prepare and submit the necessary documentation for the SBA’s Economic Injury Disaster Loans (EIDL). Please reach out to your KSM advisor or complete this form to learn how to begin the process for applying. Time is of the essence for these applications.
Keeping you updated on COVID-19 and its impact on businesses and individuals.