WASHINGTON D.C. – As part of the Trump Administration’s aggressive, whole-of-government efforts to combat the COVID-19 outbreak and minimize economic disruption to the nation’s 30 million small businesses, U.S. Small Business Administration has revised the criteria for an economic injury declaration related to COVID-19.
The relaxed criteria will have two immediate impacts:
Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance. Typically, the SBA requires any state impacted by a disaster provide documentation proving at least five small businesses have suffered substantial economic injury as a result of a disaster. Under the just-released, revised criteria, states or territories are only required to certify that at least five small businesses within the state have suffered substantial economic injury, regardless of where those businesses are located.
Expanded, Statewide Access to SBA Disaster Assistance Loans for Small Businesses. SBA disaster assistance loans are typically only available to small businesses within counties identified as disaster areas by a Governor. Under the revised criteria, disaster assistance loans will be available statewide following an economic injury declaration.
“We’re very encouraged that banks and financial institutions are responding to the President’s efforts to mobilize an unprecedented public-private response to the COVID-19 outbreak. As a result, most small businesses that need credit during these uncertain times will be able to obtain it. However, our goal is to ensure that credit is available to any and all small businesses that need credit but are unable to access it on reasonable terms through traditional lending channels,” said Administrator Jovita Carranza. “To that end, the SBA is relaxing the criteria through which states or territories may formally request an economic injury declaration, effective immediately. Furthermore, once an economic injury declaration has been made in a state or territory, the new rules allow the affected small businesses within the state or territory to apply for a disaster assistance loan.”
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business.
The U.S. Small Business Administration will offer low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the COVID-19. Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration.
Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.