Coming off what was a record-breaking year for wildfires and storms in many areas of the country, it’s nice to know the SBA is looking out for small business owners. Since independent contractors can also apply for a PPP loan, this appears to be a change to eliminate potential double counting. The SBA loan requirements on maximum loan terms vary by SBA loan type. Businesses need to understand both programs as well as the additional financial and other relief (including an Emergency Relief loan program for eligible small and mid-size employers) that may be available under the CARES Act in order to make short- and long-term planning decisions. EIDLs may be used for payroll and other costs as well as to cover increased costs due to supply chain interruption, to pay obligations that cannot be met due to revenue loss and for other uses. The Interim Rule clarifies that the PPP loans, to the extent not forgiven, will have: Small businesses and sole proprietorships can begin applying April 3, 2020, and independent contractors and self-employed individuals can begin applying April 10, 2020. For purposes of the PPP, “payroll costs” include: * Important Note: Question 7 of the FAQs clarifies that the CARES Act exclusion of any employee compensation in excess of an annual salary of $100,000 applies only to cash compensation. in order to schedule your repayment options. Loans up to $2M ; 30-year terms ; Interest rates of 3.75% for small businesses (2.75% for non-profits) First payment is 12 months from the date of the promissory note The maximum amount of a PPP loan available to each borrower is equal to the lesser of: (a) $10 million, or (b) 2.5 x its average total monthly payroll costs (as defined below). refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020; Credit Requirements. If you’re approved for an SBA disaster loan due to economic losses caused by coronavirus, you will begin receiving your funds fairly quickly. [UPDATE - MAY 20, 2020] On May 15, 2020, the SBA issued its Loan Forgiveness Application, which provided several important clarifications. Generally, SBA disaster loans will offer you the best rates, terms, and affordable financing. You may call for over-the-phone assistance at any time: 1-800-659-2955. However, you ought to consider all of your sources for emergency funding before applying to the SBA, as disaster loans may only apply to businesses without any other options. To qualify for an SBA disaster loan you must operate a business located within a declared disaster zone. Check the SBA website to see updated information regarding disaster zones throughout the country. For Coronavirus (COVID-19) Relief options and Additional Resources, CLICK HERE. 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However, many businesses are still in the dark about how they can (and can’t) spend the Small Business Administration’s (SBA) Economic Injury Disaster Loans (commonly referred to as EIDL). SBA Disaster Loan Program Frequently Asked Questions Whattypes of SBA Disaster Loans are available? SBA Disaster Loans. Payment of group health care benefits and insurance premiums (generally, medical, dental, vision and health flexible spending account benefits). The terms of the loan and established within your ability to repay. SBA disaster loan requirements. As stated in the Affiliation Rule and FAQs, the remainder of businesses are subject to the SBA’s affiliation rules applicable to its business loan programs, summarized here in the Affiliation Guidance. Certifications, including those carrying the penalties described above, must be made about the uses of the loan proceeds. include popular lenders like BlueVine, Lendio, and Fundera. Some businesses will rebound quickly and be able to repay the loan easily, while others may need more money and more time to adapt to the economic climate created by the pandemic. Owning a business requires daring and resilience, but even more grit is required when facing an unpredictable disaster. Are There Insurance Requirements for Loans? Likenesses do not necessarily imply current client, partnership or employee status. Collateral is any property or asset of value that a lender can use to balance the weight of a loan if there is substantial risk. State Governors can make Presidential or Agency requests that an area be considered to be affected by disaster. While SBA loans normally carry a personal guarantee, they have been waived for COVID Disaster Loans, up to $200,000. The SBA first attempted to make this clarification on May 5, 2020, through its addition of Question 44 to the FAQs, which stated, consistent with the Act and the existing SBA regulations, that “For purposes of the PPP’s 500 or fewer employee size standard, an applicant must count all of its employees and the employees of its U.S. and foreign affiliates, absent a waiver of or an exception to the affiliation rules.”  FAQ 44 also explained that “Business concerns seeking to qualify as a ‘small business concern’ under section 3 of the Small Business Act (15 U.S.C. However, unless changed by the SBA, it appears that the requirement for collateral on EIDLs over $25,000 would still apply, and, in processing a borrower’s application, the SBA must make a determination that the applicant has the ability to repay the loan. See our post here for more information regarding the key information in the Loan Forgiveness Application. IMPORTANT NOTICE. Loans are offered through any existing SBA 7(a) lender or through any eligible and participating federally insured depository institution, federally insured credit union, Farm Credit System institution and certain other approved depository or non-depository financing providers. Because disaster loans come from the SBA itself, you won’t have lenders adding their own requirements. Photographs are for dramatization purposes only and may include models. The SBA sets the guidelines that govern the 7(a) loan program. Your loan will be based on financial needs, regardless of whether your company suffered any property damage. The Small Business Administration’s Inspector General raised serious concerns about potential rampant fraud in a federal disaster-loan program providing coronavirus relief. Available collateral support your business keep you apprised of relevant developments operate a business located within a declared zone! 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