COVID-19 UPDATE: SBA Loans Now Available to Those Who Qualify March 20,2020
Colorado small businesses impacted by COVID-19 can now seek individual small business loans up to $2 million as part of the Small Business Administration’s Economic Injury Disaster Loan program. Small businesses throughout all 64 counties may seek SBA Economic Injury Disaster Loans.
To be eligible, applicant must:
- SBA disaster relief website (and to apply for an EIDL loan), click here.
- SBA fact sheet, click here.
- SBA useful guide and checklist for the Paycheck Protection Program, click here.
- SBA Small Business “Paycheck Protection” Loans FAQs and Info, click here.
Loan approval criteria:
- Meet SBA requirement of 500 or fewer employees
- Be directly impacted by COVID-19
How much you can borrow:
- Credit history: applicants must have a credit history to accept SBA
- SBA must determine the applicant can repay the SBA loan
- The applicant business must have suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons
How the funds can be used:
- Eligible entities may qualify for loans up to $2 million
- The interest rates for this disaster are 3.75% for small businesses with terms up to 30 years
- Eligibility for these working capital loans are based on the size, type of business, and its financial resources
What is needed to apply:
- These working capital loans may be used to pay fixed debts, payroll, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion. Funds cannot be used to pay down long-term debt.
Other information that may be requested:
- Completed loan application (SBA form 5)
- Tax information authorization (IRS form 4506T) for the applicant, the principals, and the affiliates.
- Complete copies of the most recent Federal Income Tax Return
- Schedule of liabilities (SBA form 2202)
- Personal financial statement (SBA form 413)
- Income, balance sheet, and cash flow documents
- Other information as requested
How soon businesses will receive the money:
- Complete copy, including all schedules, of the most recent Federal income tax return for principals, general partners or managing members, and affiliates (see filing requirements for more information)
- If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year
- A current year-to-date profit-and-loss statement
- Additional Filing Requirements (SBA Form 1368) providing monthly sales figures (This is especially important for Economic Injury Disaster Loans)
- Small businesses that submit complete loan packages could receive the money within three (3) weeks
- Incomplete information and verification of collateral will delay the approval process
As you consider applying for the different funding sources the Federal Government is offering to businesses, please keep the following information in mind as you make the best choices for your situation:
- Include the specific disaster in your application – specifically reference “COVID-19” or Coronavirus
- Apply online vs by mail
- Write your password down; neither the system nor any personnel can retrieve it
- Save your work at every prompt
- Do not rush through the application. Check and recheck the filing requirements to ensure that all the needed information is submitted. The biggest reason for delays in processing is due to missing information.
- Make sure to complete all filing requirements before submitting the application and forms
- Be sure to use the same contact information (business name and the name of all owners) that you use on your federal tax returns. Double-check that they match
- If your tax returns reference other businesses that you own, you must also submit those tax returns to avoid processing delays
- If more funds are needed, applicants can submit supporting documents and a request for an increase. If fewer funds are needed, applicants can request a reduction in the loan amount.
- If the loan request is denied, the applicant will be given up to six months in which to provide new information and submit a written request for reconsideration
- Federal funds often come with restrictions. If you accept funding or receive approval from one program, this may cause you to be fully or partially ineligible for other federal funding.
- Federal funding often rolls out in phases and can take many forms: Loans, Grants, etc.
- We are not currently aware of specific federal grants that are being offered at this time for business disaster recovery, but grants may become available later with specific requirements that will be determined at that time.