SBA Offers Disaster Relief Loans in Face of COVID-19
The U.S. Small Business Administration has announced that Economic Injury Disaster Loans (“EIDL”s) are now available to small businesses in Connecticut and certain counties in New York, Massachusetts and Rhode Island, that have been hit hardest by the coronavirus outbreak.
These areas are deemed to have experienced a disaster due to the declarations of emergency made there in response to the coronavirus. The loans are available to small businesses, small agricultural cooperatives, small aquaculture enterprises and most private nonprofits in the specified counties that have experienced “substantial economic injury” as a result of the disaster. “Substantial economic injury” means that the business is unable to meet its obligations and to pay its ordinary and necessary financial obligations and operating expenses, such as payroll, accounts payable and fixed debt, because of the disaster. Damage to property is not a requirement for an EIDL.
The loan amount will be based on the entity’s actual economic injury and financial needs. To receive the loan, a business or nonprofit must not be able to obtain a loan on reasonable terms from traditional lenders. The repayment term may be up to 30 years. Interest rates will be 3.75% for businesses and 2.75% for nonprofits.
Applications for an SBA Economic Loss Disaster Loan must be made online here. In addition to that application, a signed and dated IRS Form 4506-T must also be submitted to permit the IRS to provide the SBA with tax return information.