Undoubtedly, businesses both large and small are feeling the economic effects of the coronavirus pandemic (COVID-19).
One of the major issues that businesses are currently facing is the inability to maintain sufficient cash flow to continue operations in the face of the unprecedented business disruptions brought on by COVID-19.
Economic Injury Disaster Loans (EIDL) program
In response to the COVID-19 pandemic, the SBA is now offering low-interest, long-term federal disaster relief loans to provide working capital to small businesses suffering substantial economic injury as a direct result of COVID-19 through its Economic Injury Disaster Loans (EIDL) program.
Who is eligible for the SBA Disaster Relief Loan?
The EIDL program is designed to provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of COVID-19. EIDL loans will be available to most businesses directly affected by the virus (including, but not limited to, hotels, recreational facilities, charter boats, manufacturers, sports vendors, owners of rental property, restaurants, retailers, souvenir shops, travel agencies, and wholesalers).
How much may business qualify for?
Under the EIDL program, eligible businesses may qualify for up to $2 million of working capital loans to be used to pay fixed debts, payroll, accounts payable, and other bills have could have been paid had the COVID-19 disaster not occurred. The interest rates under the EIDL program are 3.75% for small businesses and 2.75% for nonprofit organizations with terms up to 30 year, to be decided on a case by case basis. For loans over $25,000, the SBA may require collateral to secure the loan.
SBA Disaster Relief Loan Approval Criteria:
Loan approval criteria under the EIDL program include these three major factors:
(1) applicant credit history acceptable to the SBA;
(2) determination by the SBA that the applicant has the ability to repay the EIDL loan; and
(3) the applicant business must be physically located in a declared disaster county and suffered capital losses due to the declared disaster, not due to downturn in the economy or other reasons. Currently, all 73 counties in Wisconsin have been designated a disaster county.
What if I have an Existing SBA Disaster Loan?
Applicants that have existing SBA Disaster Loans may still qualify for a loan under the EIDL program, however, the loans cannot be consolidated. There is no cost to apply and there is no obligation to take the loan if offered. The SBA is advising that it is taking approximately 21 days to review and approve applications.
How do I apply for an SBA Disaster Relief Loan?
Our office understands that the working capital needs of businesses are vital to their continued operations. Please contact us immediately for specific information regarding the EIDL and assistance in the application process. You can call us at 920-499-5700, or email us at [email protected]
Please note that the general information provided on the Gerbers Law, S.C. blog is merely informative and should not be taken as legal advice. The content of Gerbers Law, S.C. blog is based on the state of the law at the time of its original publication. Legal developments can change quickly. As a result, the content of Gerbers Law, S.C. blog may not remain accurate as laws change over time. Your use of this site, as well as commenting, sending an inquiry, or contact email does not create an attorney- client relationship in any way. We highly recommend that you consult with a licensed attorney before you rely or act on this information.