Small businesses across the country are looking for additional funding sources to weather the economic standstill caused by the coronavirus pandemic. The Small Business Administration (SBA) has measures in place to help. The SBA regularly offers loans to small businesses, but during declared emergencies, the federal government provides additional funds to the SBA to make loans accessible to a larger number of affected businesses. We’ve broken down everything you need to know about the SBA Disaster Business Loan Application.
What Is an SBA Disaster Loan?
Typically, SBA disaster loans are only granted to small businesses affected by natural disasters, like tornadoes, wildfires or hurricanes. COVID-19 has had a national impact, so SBA disaster loans are now available nationwide to provide small business aid during coronavirus shutdowns.
SBA disaster loans are usually available for two types of loss: economic injury, such as a loss of income due to a disaster; and property damage, such as damage to a business office or warehouse due to a tornado. Since the coronavirus is a declared economic disaster that has caused financial loss but not property damage, the coronavirus-related SBA loans fall under the category of economic injury.
Small businesses that qualify for SBA disaster loans during the coronavirus crisis can each borrow up to $2 million at a low-interest rate of 3.75% (and 2.75% for nonprofits). While businesses will have to repay what they borrow, they can do so over a long term of up to 30 years. The funds can be used to pay rent, payroll, business debts and other bills.
Due to COVID-19, small business owners across the country are able to apply for an Economic Injury Disaster Loan advance of up to $10,000 from the SBA. The loan advance — which doesn’t have to be repaid — is intended to provide economic relief to businesses that are currently experiencing a temporary loss of revenue.
Small businesses can also apply for a Paycheck Protection Program loan which allows small businesses with less than 500 employees to receive a forgivable loan to cover up to 2.5 months worth of payroll costs.
How Can I Apply for an SBA Disaster Loan?
In some of our recent posts, we have covered the two important SBA loans as part of COVID-19 relief and how to apply for these loans. An additional $484 billion stimulus package was approved by the House and Senate the week of April 20th. These additional funds are expected to go fast, so be sure you’re prepared to apply, if you haven’t already submitted an application for these loans.
Economic Injury Disaster Loans (EIDL) – EIDL Loans: How to Apply
Paycheck Protection Program Loans (PPP) – PPP Loans: How to Apply
How Can I Check the Status of my SBA Disaster Loan Application?
The fastest option is to check online. Depending on which page you were on when you filled out and submitted your application, you can use the following links to check your status. Be sure to have the Username (or email address) and Password you created to login:
SBA Disaster Assistance Customer Service Center: 1-800-659-2955 (TTY/TDD: 1-800-877-8339) (Monday – Sunday, 8 a.m. – 8 p.m. ET)
You can email for your status anytime: email@example.com
Are There Other Options?
Not all businesses will qualify for an SBA disaster loan, and even those who do may have difficulty applying. Websites are inundated with traffic from business owners seeking relief, making it harder to access forms and information. If your business ultimately doesn’t qualify for an SBA disaster loan, or if you learn that the wait time to receive funds is too long, there are other options for small business aid during coronavirus. A small business that has been operating for at least one year likely qualifies for a business line of credit, a business credit card or an online business loan. In many cases, these options can be approved and funding can be available very quickly, often within 24 hours.
If your business is suffering due to the coronavirus pandemic, don’t give up hope. There are plenty of financial options available for getting through this crisis and preserving your livelihood.