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Small businesses and startups are experiencing unprecedented economic disruption and a downturn due to the outbreak of coronavirus. However, SBA coronavirus disaster management and government officials are trying their best to maintain the security and safety of people through providing financial help.
SBA COVID-19 disaster loan, for example, provides small business owners with necessary funding under the CARES Act. There is no denying that small businesses serve as critical economic engines in any state. They play a significant role when it comes to strengthening the world’s economy.
That explains why the government took decisive and bold action to make 30 million startups and small businesses resilient to pandemic related economic downfall in the USA. SBA officials work with State Governors directly to provide low-interest and targeted disaster recovery funds to small businesses, particularly ones that the pandemic has impacted severely.
If you are a small business owner and facing financial challenges due to current circumstances, SBA coronavirus, or SBA COVID-19 disaster loan can help you survive in this time of uncertainty.
Economic Injury Disaster Loan Assistance of Coronavirus
As mentioned above, SBA is offering designated territories and states the low-interest disaster loans to provide working capital to the companies and small businesses going through the substantial economic crisis.
Economic Injury Disaster Loan Program (EIDL), in this regard, is one of the primary forms of Federal assistance for rebuilding and repairing private-sector losses. It is a disaster loan assistance that aims to provide support to small businesses.
SBA economic injury disaster loan, moreover, can provide funding up to $2 million. However, businesses can request financial assistance or loan amounts based on their economic injury. Any non-profit organization, small business, or private set up that is suffering from a significant economic injury due to declared disaster can qualify for SBACOVID loan whether it has sustained physical damage or not.
An EIDL, as a collaborative program of SBA and government, helps young businesses meet the mandatory financial obligations that they could have met if the disaster did not occur. From an economic crisis to permits businesses to need to maintain their working capital during or after the epidemic, SBA economic injury disaster loan covers everything to provide relief. It is worth mentioning that EIDL does not replace revenues or lost sales.
Program Requirements
To qualify for EIDL, business owners must have 500 or less working employees. Plus, a business can only qualify for SBACOVID based loan program if it has sustained an economic injury. It should be located in a contagious county or disaster declared state.
Some of the common eligible businesses of the EIDL program include recreational facilities, manufacturers, wholesalers, tourism-based businesses, rental properties, and retailers. In addition to that, small agriculture and aquaculture businesses and enterprises can qualify for Economic Injury Disaster Loan Program.
This SBA economic injury disaster loan has the following filling requirements.
Businesses need to submit;
- Completed SBA loan form or application
- Schedule Liabilities (2202 SBA form)
- Tax details and authorization (4506T IRE form) for business principals and applicants
- Details of monthly sales (1368 SBA form)
- Current federal Income tax return copies
- Updated profit and loss business statement of the current year
Criteria for EIDL Approval
As mentioned before, the applicant business needs to have operational services in the declared disaster locations and must have suffered capital losses.
Besides this, SBA runs a check on the applicant business’s credit history to assess whether it meets the requirements or not. The business administration also determines the ability of the applicant’s business to repay the loan.
Paycheck Protection Program
The CARES Act has another small business funding option known as the Paycheck Protection Program or PPP loan. SBA, in collaboration with the government, has designed this SBA loan program to provide cash to small businesses and startups quickly.
The loan program also incentivizes entrepreneurs to keep their staff on payroll with its loan forgiveness option. PPP SBA COVID19 loan gives financial support to the small businesses to manage payrolls and other benefits of the employees for eight weeks.
Note
One of the features that make this SBA loan plan different from other disaster relief programs is “forgiveness” it entails. SBA paycheck protection fully forgives the loan amount if a business manages to retain all its employees and uses 75 percent of loan money on payroll.
Like EIDLs, a small business must have at least 500 or less working employees to become eligible for PPP. The SBA loan program offers an ideal working capital to both sole proprietors and small enterprises. Even self-employed individuals and independent contractors can apply for this SBA COVID 19 loan.
Who is Eligible to Apply
The following are the entities (affected by COVID-19) that are eligible for PPP.
- A small business that meets the standard of SBA size (either industry sized standard or any alternative standard)
- A nonprofit organization that comes under section 501(c) (3), a tribal business section 31(b) (2), veteran organization 501 (c) (19) are eligible. These businesses must have at least 500 employees and must meet the industry sized standards if work with more than 500 employees
- The businesses with a NAICS Code such as housing and Food services that begin with 72 and have multiple physical locations and hire less than 500 employees per location
Documentations Business Need to Apply
Businesses need to work with their participating lenders and submit the following documentation to apply for PPP.
- Payroll record with tax history for the previous year
- Documents of expenses and income, bank records, and any supporting documentation to show payroll amount if an applicant is a sole proprietor
OGS Consultants- Your Point of Help
Drafting documents for SBA disaster loans can be an arduous process, especially if you are applying for the first time. The business plan needs to make a strong appeal and provide essential information that is required to approve the loan.
This is when you need the assistance of professional business plan writing experts like OGS Capital Consultants to draft impeccable loan approval plan. These consultants excel at professional drafting, negotiations, and reviewing your loan application to write a perfect business plan.
Thus, you can contact our experts because they have the right skills and experience to help your small business prepare a plan necessary to qualify for SBA coronavirus loans.
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