SBA Disaster Loans FAQ

​

Comments and current guidance

​

The information below is not meant to be a substitute for any other advice you may obtain paid or otherwise.  This is offered as a free sharing site.  The economic, financial and regulatory environment is changing so fast and the information below may be outdated.

​

Small Business Administration Economic Injury Disaster Loan Program

​

Here are some additional quick Q&A on Disaster Loans and Eligibility I ‘ve had from the group and others we received some guidance on.

 

Who is Eligible?

A small business concern, Most private non-profits of any size, A small business engaged in aquaculture. Small agricultural cooperative

 

Eligibility Criteria?

1. Located (physical presence) within the declared disaster area. 2. Have suffered, or are likely to suffer, substantial economic injury as a result of the disaster, 3. Do not have Credit Available Elsewhere, 4.The size of the applicant alone (without affiliates) must not exceed the size standard for the industry in which the applicant is primarily engaged and The size of the applicant combined with its affiliates must not exceed the size standard designated for either the primary industry of the applicant alone or the primary industry of the applicant and its affiliates, whichever is higher., 5. Must be an independently owned and operated business

 

Maximum Amount and Terms of the loan?

The maximum loan amount is up to $2 million. The loan amount is based on the working capital needs caused by the coronavirus so the business can meet its ongoing obligations.  The interest rate is 3.75 percent for small businesses and 2.75 percent for private nonprofit organizations with terms up to 30 years. Loan amounts and terms are set by SBA and are based on each applicant’s financial condition.

 

Is Collateral Required?

For the first $25,000, no collateral is required. Over $25,000, you may be required to pledge available collateral.

 

Time to Apply?

SBA’s declaration itself (application period) for providing Economic Injury Disaster Loans typically lasts nine months; however, SBA can extend the application deadline, as it is understood this is still an ongoing event (versus a tornado, flood or the like).

 

Place to Apply?

In this case, all applications and processing will be done online/virtually at https://disasterloan.sba.gov/ela/. The Disaster Assistance Call Center is available to answer questions from small businesses by phone: 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail: disastercustomerservice@sba.gov. The call center is open Monday – Sunday, 8a.m. – 8p.m. ET. Additionally, our resource partners and our local SBA staff are still available in your local community to help answer the questions.

 

Deferred Payments?

For this specific declaration, payments will be deferred for 12 months

 

Loan Volume Caps?

There is no state or territory limit on the number of loans or the total amount of the loans combined.

 

How to define loss?

A business needs to define its loss in comparison to its 2019 operations/financials. Losses will be compared to the effective incident period starting on January 31, 2020. Just a loss needs to be reported; there is no threshold of a percentage or dollar amount.

 

Use of Proceeds?

To pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.

 

Credit Elsewhere?

SBA is limited by statute to only provide loans to small businesses that do not have access to credit elsewhere.

​

INELIGIBLE USE OF PROCEEDS(disbursements/refinance/relocation)?

EIDL proceeds may not be used for: 1. Payment of any dividends or bonuses; 2. Disbursements to owners, partners, officers, directors, or stockholders, except when directly related to performance of services for the benefit of the applicant; 3. Repayment of stockholder/principal loans, except when the funds were injected on an interim basis as a result of the disaster and non-repayment would cause undue hardship to the stockholder/principal; 4. Expansion of facilities or acquisition of fixed assets; 5. Repair or replacement of physical damages; 6. Refinancing long term debt; 7. Paying down (including regular installment payments) or paying off loans provided, or owned by another Federal agency (including SBA) or a Small Business Investment Company licensed under the Small Business Investment Act. Federal Deposit Insurance Corporation (FDIC) is not considered a Federal agency for this purpose; 8. Payment of any part of a direct Federal debt, (including SBA loans) except IRS obligations. a. If a direct Federal debt is delinquent, your recommendation must be based on independent documentation from the appropriate Federal agency explaining how the delinquency will be cured. 50 30 9 76 Effective Date: May 31, 2018 b. If a direct Federal debt is delinquent because of the disaster, we should make arrangements with that Federal creditor to have payments deferred or a similar action taken to bring the delinquency current prior to approval of an EIDL. If the Federal creditor cannot or will not cooperate, the likely result will be a decline of the EIDL request. However, if the applicant has other resources or recoveries, we should generally allow (and perhaps require) those resources to be applied first to ineligible needs, such as the payment of direct Federal debt. c. When processing during the injury period, it is generally appropriate for you to negotiate with Federal creditors to defer payments (or take similar action) until the end of the injury period. You must document why this was or was not imposed. 9. Pay any penalty resulting from noncompliance with a law, regulation or order of a Federal, state, regional, or local agency. 10. Contractor malfeasance; and 11. Relocation.

​