SBA Economic Injury Disaster Loan Assistance - Can it Really Help Me?
With “Temporarily CLOSED” signs on the doors of many of our businesses and many others struggling to keep them open; many of us put pressure on the Governor’s office earlier this week to request emergency disaster funding from the SBA. Late Wednesday it was announced this request was made and yesterday the SBA listed the entire Commonwealth of Virginia as an economic disaster.
"Great," you say, "but what does this mean to me?" It means you may qualify for a low interest loan to help your business stay open. This will mean you can pay your employees, rent or mortgage, vendors and keep the lights on through this time. The funds may cover up to six months of expenses to help until things get back to “normal”. Several of us in the industry were on calls the last couple of days getting the necessary information to get out to the business community as quickly as possible.
You MUST apply directly through the SBA website. The process is pretty straight forward, but there are a few things that may trip you up. Luckily Christine Kriz of the Lord Fairfax Small Business Development Center is an amazing partner to advise you through this process – she has already set-up webinars to help businesses apply online. They are on Zoom and you can find the links on their Facebook Page.
Here is a list of FAQ’s I put together from the webinars I attended, hopefully they can help you as you apply. NOTE: This is not an official SBA FAQ document, it is something created by me to simply assist businesses with the process.
SBA Economic Injury Disaster Loan Assistance
FREQUENTLY ASKED QUESTIONS:
Q. What is considered a small business?
A. Businesses with annual revenue <$50Million AND<100 employees
Q. Who is Ineligible?
A. Agricultural Enterprises, religious organizations, charitable organizations, gambling concerns or organizations who derive 1/3rd of their annual gross revenue from legal gambling activities, casinos and racetracks
Q. Can I refinance my long term debt with an EIDL?
A. No. You may use the funds to make your regular payment, but you cannot refinance debt with it
Q. How much is available?
A. Up to $25,000 unsecured OR up to $2,000,000 secured
Q. What is acceptable collateral?
A. Real estate, equipment, lease hold improvements, business assets – even if no equity!
Q. What are the terms?
A. Up to 30 years at a fixed rate of 3.75% for businesses and 2.75% for non-profits
Q. What Non Profits are eligible?
A. Organizations who have a revenue generating arm, such as a thrift store or nonprofit day care, etc.
Q. What nonprofits are ineligible?
A. Not churches, charitable organizations like Rotary.
Q. Will passive businesses qualify or EIDL?
A. Yes. Property owners can apply if they are anticipating loss of rent.
Q. Can I use EIDL loan to pay off my line of credit, credit card, etc.?
A. Yes as long you can document that the line, credit card, etc. was used for bridge funding because of the COVID-19 disaster.
Q. How can I apply?
A. You MUST apply online through the SBA at https://disasterloan.sba.gov/ela/
NOTE:
• You must select Corona Virus (COVID-19) with the incident period of 1/31/2020 as the disaster
• ONLY check Economic Injury to apply for the EIDL funding – if anything else is selected it will delay the application!
Q. How much does it cost to apply?
A. $0 to apply, if you are collateralizing, you will need to pay for the filing fees such as tax stamps, UCC liens, etc.
Q. How long will I take to be approved?
A. The SBA is anticipating 21 days to be approved.
Q. How soon will I receive the funds?
A. It depends on the collateral, but plan on up to 45 days from approval. Unsecured may be sooner.
Q. How long do I need to keep my receipts documenting the use of the funds I receive?
A. You must keep your receipts and documents showing how you used the funds or three years.
Q. Will there be any prepayment penalty on the EIDL?
A. No.
Q. What if I am approved and I don’t need the full amount, or want to delay receipt?
A. You are not obligated to take the full amount you are approved for – or to take it immediately, if you do not take it, the approval will be on file for six months.
Q. Does an EIDL loan count toward the aggregate SBA loan maximum?
A. No. This is a separate “bucket” of funds not affiliated with the 7a program.
Q. Where can I get help with my application?
A. Call your local Small Business Development Center, or the SBA at 800-659-2955 or email disastercustomerservice@sba.gov.
This article was contributed by Amelia J. Stansell, Senior Commercial Loan Officer, UVA Community Credit Union.
