Mar 18, 2020

Everything You Need to Know About SBA COVID-19 (Coronavirus) Loans

Due to the fast-changing nature of COVID-19 programs and SBA COVID-19 programs, posts may become quickly out of date. Please check our COVID-19 section for the most up-to-date information on rates, terms, and other info for PPP loans/EIDLs. 

President Trump announced a call for the US Small Business Administration (SBA) to increase SBA loans by an additional $50 billion to support small businesses affected by the spread of COVID-19, the disease caused by the novel coronavirus. Here’s everything small business owners need to know:

We will keep this post updated as more information becomes available. 

What Are the SBA COVID-19 (Coronavirus) Loans?

On Thursday, March 12, 2020, the SBA released information about disaster assistance for small businesses affected by coronavirus (COVID-19). It’s important to note that none of this is yet official, but we can use it as an outline for what to expect. 

Loan Amount

Up to $2 million through SBA’s Economic Injury and Disaster Loans.

Eligible Businesses 

Small businesses and private, nonprofit organizations in eligible states and territories. Small businesses that have credit available elsewhere are not eligible. 

Eligible States and Territories

These loans will be made available in designated states and territories. Before loans can become available, your governor must place a request. Once a state or territory becomes a designated area, information on how to apply will be made available. 

Loan Use

Loans can be used to “pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.”

Interest Rate

3.75% for small businesses; 2.75% for nonprofits.

Loan Term

Typically long terms, decided on a case-by-case basis, with a maximum term of 30 years. 

When Will SBA COVID-19 (Coronavirus) Loans Be Available?

We don’t know yet. The expansion of SBA loans requires congressional approval, so we can expect it to take some time (could be days, weeks, or months). The House of Representatives passed the Families First Coronavirus Response Act Friday, March 13, 2020. While it has economic measures in place, there is no mention of expanded SBA funding. 

The good news is that the Senate canceled a planned recess, so the odds of a shorter congressional timeline are better now than when they were first announced. SBA funding typically takes anywhere between 30 and 90 days, so you can expect that baseline, in addition to accounting for the time and changes due to congressional negotiations. 

Who Is Eligible for SBA COVID-19 (Coronavirus) Loans?

To qualify for the specially designated SBA loans, your small business or nonprofit organization needs to be in an eligible area. Also, small businesses cannot have any additional credit available. These loans are subject to existing SBA loan guidelines and approval processes, so while additional funding may be made available, that doesn’t mean that borrower requirements will relax. 

Additionally, your business needs to demonstrate that you’ve experienced a “blip” as a result of coronavirus. That is to say that the lender will need to see that your business was doing well and experienced a demonstrable economic impact as a result of the disease. The specific dates of this blip and your business’s location will likely factor into a lender’s decision to award the loan. 

Alternative Funding Options If You Don’t Qualify or Don’t Want to Wait

SBA loans are not your only funding option. If your business doesn’t quite qualify for an SBA loan or you need funding sooner, here are some financing options to consider.

Our dedicated funding managers, your personal small-business-loan experts, are here to help you navigate your business loan options and find the best financing solution for you. 

 

Everything You Need to Know About SBA COVID-19 (Coronavirus) Loans

While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.

About the author

Mary Kate Miller
Mary Kate Miller
Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.

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