SBA Revises Disaster Loan Process for Small Businesses during Virus Outbreak
In the wake of the U.S. Federal Government’s announcement of distributing $50 billion in low-interest Disaster Assistance Loans through the SBA to offsetrecent challenges, the SBA revisited its loan processes to provide a more efficient means of getting funding approved and in the hands of borrowers.
Available for small businesses and non-profits, this is positive news in a not-so-positive time. When you think about it, slowing consumer spending, mandatory business closures, even kinks in supply chains all affect the ability for businesses to weather the current challenges. Even though short term business loans and direct lenders are other options, these recent revisions to the SBA loan program may be worth considering.
According to the SBA, the revised loan process or what is called “relaxed criteria” has two immediate changes for businesses including:
Fast, Easy Qualification Processes for States that Seek Assistance
The SBA reported that States/Territories only need to certify “at least five small businesses” that have been affected by the virus outbreak, regardless of where the businesses are located. Normally, the SBA would require that any state or territory affected by a disaster would need to provide documentation certifying that “at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish.”
More Access to SBA Disaster Relief Loans
Before the new guidelines were announced, the SBA’s Disaster Assistance Loan was only accessible to private small businesses or non-profits in counties or regions claimed by the State Governor. Now, the loans can be issued Statewide (following economic injury). It applies to current as well as future disaster assistance declarations related to the Coronavirus. Once a declaration by the State is made, the application process will be made available.
Businesses can apply for loans up to $2 million to cover existing debt, payroll, monthly bills, or other associated costs and current rates include 3.75 percent for small businesses and 2.75 percent for non-profits. Long-term loans up to a maximum of 30 years may also be available, but are determined on a business-by-business basis depending on the borrower’s ability to repay the debt.
For all the details visit the SBA at https://disasterloan.sba.gov