The risk to small businesses is so great that not only is SBA offering relief, but other organizations like Facebook have pledged grant money to help those businesses in need.
The Small Business Association announced last week it will be offering low-interest loans to small businesses and nonprofits severely affected by the COVID-19 pandemic as part of its Economic Injury Disaster Loan program.
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business.
The virus is a public health risk the likes of which businesses in the U.S. have not faced, and the economic implications are scary—particularly for small businesses like remodelers. Scary not because the implications are clear and impending. In fact, it’s the uncertainty of the impacts that make the outbreak so unnerving. There are travel restrictions and bans, events are being cancelled, businesses are being asked to temporarily close or alter their business while social distancing keeps people in their homes avoiding interactions—these widespread efforts to contain the virus, while personally inconvenient, are also effectively freezing the economy. In an interview this week with The New York Times, Michael Greenburg, a professor at the University of Maryland who researches financial stability, said that "the economy is coming to a half of a dead stop."
It’s because of these reasons—as well as an anticipated needs for cash and difficulties securing it—that the SBA is offering its low-interest loans. “Small businesses are vital economic engines in every community and state, and they have helped make our economy the strongest in the world,” said SBA Administrator Jovita Carranza in a statement. “SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.”
Process for accessing an Economic Injury Disaster Loan, according to the SBA
- The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the novel Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
- Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available to small businesses and private, non-profit organizations in designated areas of a state or territory to help alleviate economic injury caused by the novel Coronavirus (COVID-19).
- SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
- Once a declaration is made for designated areas within a state, the information on the application process for Economic Injury Disaster Loan assistance will be made available to all affected communities.
- These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
- SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.