As news quickly evolves, Employer Flexible will be providing brief updates on Coronavirus (COVID-19) related news and its impact on employers. As you may know, there have been recent legislative developments regarding financial assistance for small businesses during this time.
What it is:
Last week, President Trump instructed the U.S. Small Businesses Administration (SBA) to offer loans to small businesses across the country who have been impacted by COVID-19. Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19). The Disaster Assistance Program will be an Economic Injury Loan, and the link is already live for business to apply directly with SBA here.
How it works:
The SBA will work directly with state Governors to provide targeted, low-interest loans to small businesses and non-profits that have been severely impacted by the Coronavirus (COVID-19). The SBA’s Economic Injury Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
These loans are a completely separate type of SBA loan than those which SBA routinely makes to borrowers under normal circumstances. Find more information on the Economic Injury Disaster Loan here.
The program parameters for this Economic Injury Loan are not yet finalized by Congress, only Bills being considered at this point. However, the preliminary details include:
- Up to $2MM for Working Capital purposes/business overhead expenses (includes payroll, lease and loan payments, other G&A, etc.)
- Businesses under 500 employees
- Profits & Some Non-Profits (but not churches, houses of worship)
- No refinance of existing debts
- First payment of the term WC loan would be 1 year from note date
- Credit would be flexible, but Pre-coronavirus performance to show viability may be required
- Low interest not to exceed 4%
*Please note that Borrowers may apply but there is no Disaster Assistance Program set yet and the above parameters may change.
SBA is available to assist small businesses with accessing federal resources and navigating their own preparedness plans as described by the CDC’s Guidance for Businesses and Employers. Small businesses are encouraged to do their part to keep their employees, customers, and themselves healthy. Find out more about the SBA loan resources here.