Posted on March 18, 2020 at 10:35 AM, updated March 18, 2020 at 10:36 AM Print
In an effort to help small businesses affected by the Coronavirus (COVID-19) outbreak, the US Small Business Administration (SBA) is working with the state of Ohio to declare an economic disaster. Once the declaration is made, this would allow Ohio small businesses access to the SBA's Economic Injury Disaster Loan (EIDL).
EIDLs provide the necessary working capital to help small businesses survive until normal operations resume after a disaster.
What businesses are eligible to apply?
Entities eligible to apply include small businesses, small agriculture cooperatives and most private, non-profit organizations.
How much can a business borrow?
The SBA can provide up to $2 million to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. The loan amount will be based on the actual economic injury and the company's financial needs, regardless of whether the business suffered any property damage.
The interest rates for this loan is 3.75% for small businesses and 2.75% for non-profit organization with terms up to 30 years.
How can businesses use the loan funds?
The loan can be used to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred. The loan is not intended to replace lost sales or profits or for expansion.
What is the criteria for a loan approval?
Credit History - Applicants must have a credit history acceptable to SBA.
Repayment - SBA must determine that the applicant business has the ability to repay the SBA loan.
Eligibility - The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons.
What are the collateral requirements?
Loans under $25,000 do not require collateral.
Loans over $25,000 will require collateral. SBA takes real estate as collateral when it is available.
SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available.
Ohio businesses will be able to apply for EIDL very soon. We will continue to monitor and dispense information as they become available. If you have any questions, please don't hesitate to reach out to our team.