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How to Apply for COVID-19/SBA Loans/Grants

This article was put together by Business Consultant, Les Flynn of Blue Wolf, LLC. 404.932.7096 / /

The new CARES Act legislation was signed into law Friday, plus some minor changes occurred with the SBA disaster loan program, so I will try to cover what you need to know in as brief a manner as I can.

I am also providing this link to my cloud-based OneDrive folder where I have placed several files that you can access anytime you choose. I will reference the files in the info below. This link is easiest to use if you access via a computer. And if I add additional files, you will have access to those as well.

SBA’s COVID-19 disaster loan program – This is still available. Start by clicking on this link, then select the red button “APPLY FOR ASSISTANCE.” Then select Economic Injury Disaster Loans and click the link to begin an application. You will answer 2 questions to confirm you are eligible and then complete the required information on the business, the business owner(s), and a few other questions. For any documents requested of you after you sign and submit, there is an upload feature.  But you can also mail, email, or fax the documents. This loan comes directly from the SBA. Banks are not involved in the disaster loan program.

FEATURES (see in my folder a PDF file called “SBA Disaster Assistance Resources for Business”):

  • Key feature: You can get a $10,000 advance on your loan request; and this advance does not have to be repaid.
  • Loan amount: Up to $2 million (determined by SBA based on information you provide).
  • Terms: Annual interest is 3.75% and the length is determined by SBA (but can be up to 30 years).
  • Other terms: For certain, I know that no collateral is needed for loans up to $25K. I am no longer certain about amounts above $25K.
  • Who is eligible: Any small business that claims its sales/revenue has been impacted by the Coronavirus.
  • What uses: The money can be used for most any business purpose (employee wages, rent, utilities, AP, other bills).
  • VERY IMPORTANT: If you receive this loan so you can pay your operating expenses (rent, utilities, wages, etc.), you cannot get a loan under the Paycheck Protection Program (discussed next), which has a loan forgiveness feature that could make it a better option for you.

SBA’s Paycheck Protection Program – This is part of the CARES Act legislation and provides for emergency business loans under SBA’s 7(a) program (without all the red tape).  Its focus is help small businesses retain their workforce. You apply for this loan through a bank or other financial institution that is an approved SBA lender.  Most financial lenders are approved SBA lenders, and you can obtain this loan from any of them if your bank does not participate. I attended a bank webinar that answered a lot of questions about this loan Program.  The 30-minute recording of this webinar is an mp4 file available in my folder called “United Community Bank CEO call.”  I believe you need to download the file to your laptop/tablet to listen to it, but it is worth it.

FEATURES (see in my folder an excellent PDF file called “US Chamber of Commerce Payment Protection Program Small Business Guide”):

  • Loan amount:  You can borrow up to 2.5x your company’s average monthly payroll costs over last 12 months. “Payroll cost” includes salaries and wages, vacation and sick time costs, group health benefits costs (including insurance premiums), and state or local (not federal) taxes assessed on employee compensation.
  • Terms: Annual interest is 4.0%, up to 10 years to repay any portion not forgiven (see last bullet about loan forgiveness).
  • Other terms: No collateral. No personal guarantees.
  • Who is eligible:  A business (incl non-profits) with fewer than 500 employees, individual who operates as a sole proprietor or independent contractor, and self-employed individual who regularly carries on any trade or business.
  • What uses:  Primary purpose of money is for employee wages (including reasonable salary of business owner), rent/lease, utilities, normal operating expenses. See last bullet about loan forgiveness.
  • Where to get the loan: Again, apply for this loan through a financial institution (it can be your bank or any other lender) that is an approved SBA lender. Do not contact the SBA for this loan.
  • Loan forgiveness: If used for payroll costs, utilities (electricity, gas, water, transportation, telephone, or internet), and rent, the amount you spend on these items during the 8-week period after you get the loan can be forgiven by the government.

And finally, if you have run out of books to read and want an 800+ page document to put you to sleep, you can find the complete text of the new legislation in my folder. It is a PDF file called “CARES Act text.”  While this email is about help for small businesses, there is more in the CARES Act about the help for families we all heard about (increased unemployment, and tax rebate checks).