The US Small Business Administration is offering disaster assistance loans for small businesses experiencing substantial economic distress as a result of Coronavirus (COVID-19). You can utilize these loans to pay fixed debts, payroll, accounts payable, and other bills, that cannot be paid because of the disaster’s impression.
A webinar conducted by Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, highlighted the main characteristics of the Small Business Administration loans amid COVID-19.
Here are the highlights of the SBA’s COVID-19 Disaster Relief Lending:
- The SBA’s loans offer up to $2 million in support for each affected small business.
- The interest rate is 3.75% for small businesses, and for non-profits is 2.75%.
- The SBA extends loans with long-term repayments to keep payments cost-effective, up to a maximum of 30 years, with fixed interest.
- For loans extending up to $25,000, there will be no need for collaterals.
- There is a bracket of 25-30 approval days for the closing of the loans.
- There are no applications or closing costs associated with the procedure.
- The SBA Disaster loan is a capital loan.
- Once your loan is approved, there will be no obligations.
- On approval, the applicant will receive a check from the Treasury Department.
- Post-approval, the applicant has the flexibility to not utilize the loan for up to one year.
- The SBA extends interest-only loans for one year.
- Since it is a government loan, the bank is not involved. The first lien is with the government.
- The SBA will not decline a loan, if there’s a lack of collateral.
- If in case there is a lien, the SBA will be the second lien holder.
- The pre-revenue company, which was already hard-pressed for cash, COVID-19 might not be the real reason for the shortfall for money. Hence, in such circumstances, no loan will be granted.
- All owners with 20% or ownership of the business must submit their credits to the SBA.
- The loan will be declined by the SBA if in case 20% or more owners have enough money in their bank accounts.
- Another reason for disqualification will be, enough reserve to expenses for one year is a disqualification.
- The SBA will accept online here.
- The online system is a little prolonged. Hence, we advise you to be calm and patient.
- Further, we advise you to write down and remember your password.
- Complete SBA Form 5, for sole proprietors: 5C and 4506T, and for personal financials: Form 413, YTD PL.
- The SBA typically receives 350K+ applications, and these days it is much higher.
- Typically, it takes about 3-4 weeks for a response, and now it might be longer.
Feel free to contact MyTaxFiler. We can help you with the loan applications and the entire process. Get in touch with Anand Palanisamy at firstname.lastname@example.org. He is closely monitoring the COVID-19’s effects on small businesses, assists federal business loans, tax credits, and relief.