Entrepreneurs seeking to sustain their small businesses amidst the COVID-19 outbreak may be able to seek disaster funding assistance through the U.S. Small Business Administration (SBA).
Small businesses across the economic landscape can apply for loans up to $2 million. Small agricultural cooperatives and most private nonprofit organizations are additionally eligible to apply for loans. Interest rates will generally be 3.75% for small businesses and 2.75% for non-profits, and never exceeding 4%. Loan terms will not exceed 30 years, and the administration has approved a one-year deferment on the payments.
The federal government plans to allocate up to $50 billion in loans to cash-strapped businesses nationwide through the SBA.
As President Trump stated on March 20, “Today I spoke with our Nation’s Small Businesses, which employ nearly half of America’s workforce. We are taking the MOST aggressive action in history to deliver fast relief to your businesses and workers. We will always protect our Small Businesses!”
Loan amounts will be based on actual economic injury and a company’s financial needs.
Certain states and counties have been approved as eligible COVID-19 disaster areas through the SBA. Businesses and nonprofits can visit www.disasterloan.sba.gov to check if they fall within an eligibility zone (the list of disaster areas is growing). Site visitors can filter by state or county to display limited search results.
Next steps: register and apply online by completing the five-page SBA disaster loan application, and pulling together all information it requests.
Time Is of the Essence
For small businesses grappling to survive amidst the crisis, immediate cash is pivotal, and “can mean the difference between them surviving and failing,” Alejandro Contreras, director of the SBA’s Office of Disaster Assistance told Yahoo Finance.
“We’ve had a lot of experience with large scale disasters over the past years but this is something that we haven’t really seen before,” said Contreras, adding “The money’s already starting to be approved.”
It typically takes two and three weeks to process a decision on an application, noted Contreras, underscoring that complete and clear applications will receive faster approval.