U.S. Small Business Administration Offers Loans to Help Small Businesses Affected by COVID-19March 23, 2020 – Legal Alerts
The U.S. Small Business Administration (SBA) has taken steps to help small businesses affected by the COVID-19 pandemic and related business shutdowns.
The SBA’s Economic Injury Disaster Loan (EIDL) Program offers low-interest federal disaster loans in designated states to small businesses for working capital in light of economic injury caused by COVID-19. States in which small business owners are currently eligible to apply include Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Virginia, Washington, and West Virginia.
Applicants can apply for up to $2 million in assistance. The $2 million cap can be waived under certain circumstances if the business is considered a major source of employment.
These loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid because of the pandemic’s impact. The interest rate is 3.75 percent for small for-profit businesses and 2.75 percent for private non-profits. SBA offers loans with long-term repayments of up to 30 years to ensure payments are affordable for struggling companies. Terms of the loans are determined on a case-by-case basis upon each borrower’s ability to repay.
What constitutes a small business is based upon individual considerations about the company and the relevant industry. The SBA measures small businesses on the basis of published size standards. Under applicable federal regulations, “a size standard, which is usually stated in number of employees or average annual receipts, represents the largest size that a business (including its subsidiaries and affiliates) may be to remain classified as a small business for SBA and federal contracting programs. The definition of ‘small’ varies by industry.” Depending on the industry, a business can be eligible even if it employs as many as 500 to 1,500 employees. For more information about size standards, please visit https://www.sba.gov/document/support--table-size-standards.
Applicants may download applications and apply for the emergency relief at https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email [email protected] for more information on SBA disaster assistance. The deadline to apply for an economic injury disaster loan is Dec. 21, 2020.
If you have questions about the SBA’s emergency loan assistance to small businesses or any aspect of employment law related to the COVID-19 pandemic, please contact any of Dinsmore’s labor & employment attorneys.