SBA Disaster Loans During COVID-19
There’s no denying that owning a small business is hard. After all, if it were easy, everyone would do it. When a pandemic like COVID-19 occurs, small business ownership becomes even more difficult.
This is particularly true if you own a restaurant, bar, entertainment center, or recreational facility as governor Jay Inslee shut these types of establishments down in the state of Washington. The good news is there is you can find economic relief through a disaster loan from the U.S. Small Business Administration (SBA).
What is an SBA Disaster Loan?
The SBA Section 7(b) states that the Economic Injury Disaster Loan can provide up to $2 million to support businesses with less than 500 employees when disaster strikes. You can use these funds to cover debts, accounts payable, payroll, and other bills that you can’t pay due to revenue loss.
Keep in mind, however, that you can’t use them to make up for any profits that you may have lost. The loan is essentially for any expense that you would have been able to take care of if coronavirus never occurred.
When it comes to interest rates for these types of loans, they are 3.75% for small businesses and 2.75% for non-profit organizations. Loan terms vary and go up to 30 years. In addition to low interest rates and long terms, SBA disaster loans offer a one year payment deferment. So if you take one out, you won’t have to make your first payment until a year after your official loan date.
How to Apply for an SBA Disaster Loan
If you believe your small business can benefit from an SBA disaster loan during COVID-19, check out the Coronavirus page on the SBA site to find out if your area is eligible. If it is, you can apply online at https://disasterloan.sba.gov/ela. You will need to submit a financial statement for each owner as well as any partner, officer, director, or stockholder with at least 20% ownership in your organization.
Typically, the SBA would help you with the application process in person. Due to COVID-19’s social distancing requirements, however, they are now providing assistance online. You can count on the SBA staff to guide you through the application virtually if you’d like.
Even though there is currently an influx of applications, the SBA is working diligently to approve loans as soon as possible. To ensure you hear back in a timely fashion, it’s important to complete your application thoroughly and accurately. Missing or incorrect information may lead to delays.
If the SBA approves your application, you’ll receive Loan Closing Documents that you’ll need review and sign. Once the SBA receives them, they’ll make an initial disbursement of $25,000. Then, a case manager will work with you to schedule subsequent disbursements until you receive the full amount of your loan.
Interested in an SBA Disaster Loan? Clark Raymond Can Help!
Clark Raymond is dedicated to supporting small businesses in the area during these unsettling times. If you’d like to take out an SBA disaster loan, we’d be more than happy to assist you with the application process. Don’t hesitate to contact us today.