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Tuesday, March 24, 2020

SBA Streamlines Criteria for Economic Disaster Loans


On March 18, 2020, as part of federal efforts to combat the coronavirus (COVID-19) outbreak and minimize economic disruption to the nation’s 30 million small businesses, the U.S. Small Business Administration (SBA) issued revised and relaxed criteria for states or territories seeking an economic injury declaration related to COVID-19.

SBA Economic Injury Disaster Loans (EIDLs) are issued in amounts ranging from $25,000 up to $2,000,000. Some of the loan attributes are as follows:

  • 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 nonprofits 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.
  • EIDLs are just one piece of the expanded focus of the federal government’s coordinated response. The SBA is strongly committed to providing the most effective and customer-focused response possible.

Under the recently enacted guidance, the relaxed criteria will have two immediate impacts:

  • Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance Historically, the SBA has required that any state or territory impacted by disaster provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish. Under the new criteria, states or territories are only required to certify that at least five small businesses within the state/territory 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, EIDLs will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to the coronavirus.

We Can Help

There are a number of ways Armanino can help support you through the SBA loan process. If you have questions or concerns related to SBA loans, don’t hesitate to reach out to our COVID-19 Rapid Response Team.

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