| Mario J. Fazio
The U.S. Small Business Administration (SBA) is now offering low-interest federal disaster loans to small businesses and non-profits who are suffering economic hardship as a result of the Coronavirus (COVID-19). On Thursday, March 19th, the SBA approved a request from Ohio Governor Mike DeWine to allow Ohio small businesses to apply for these loans.
The Economic Injury Disaster Loans are available up to $2 Million. We expect that many businesses will experience substantial revenue disruption (loss) as a result of COVID-19, and may experience working capital shortfalls. If you expect that your business will experience a working capital shortfall, the SBA disaster loan should be considered as a possible financial resource. An SBA loan can be used as working capital to pay bills, payroll, accounts payable and similar business expenses that would otherwise not be timely paid due to the loss of revenue associated with the COVID-19 impact. The interest rate for the Economic Injury Disaster Loan are expected to be 3.75% for small businesses and 2.75% for non-profits organizations. Repayment terms are determined on a case-by-case basis, but there are long-term repayment options available up to 30 years.
As part of this process, you recommend that you review your current insurance policies to determine if there is coverage for revenue disruption (loss) as a result of COVID-19. Also, eligibility for an SBA loan will depend, in part, on your business’ inability to borrow working capital from other sources such as your bank. If you have an existing lender and are considering an SBA Disaster Assistance loan, you should discuss your anticipated working capital needs with your lender.
You may begin your application for an SBA Disaster Assistance loan at http://disasterloan.sba.gov/ela. In addition to the loan application, the business and each 20% or greater owner, general partner, or and managing member of the business will need to complete an SBA financial statement (SBA Form 413), along with a copy of the most recent federal tax returns, a schedule of fixed liabilities and an IRS from to release certain tax information. Instructions are provided by the SBA in the loan application materials. Once you apply, the SBA will review and determine your eligibility for a loan.
If you would like to discuss the SBA Disaster Assistance loan program with a Meyers Roman attorney, please contact any of the following attorneys at 216-831-0042.
Peter D. Brosse – ext. 144
David V. Croft – ext. 116
Bryan J. Dardis – ext. 189
Mario J. Fazio – ext. 139
Robert A. Fuerst – ext. 179
Scott M. Lewis – ext. 124