On Saturday, March 21, the U.S. Small Business Administration announced that Minnesota small businesses adversely impacted by the coronavirus can apply for low-interest Economic Injury Disaster Loans (EIDL). (The following are experts from regional coverage by BankBeat and are distributed with permission.)
Under the EIDL program, direct loans of up to $2 million per business are immediately available, and no national or state caps – on the amount of money the federal government is prepared to lend to support small business – have been put in place, said SBA officials during a media briefing. “If you are eligible, you will get it,“ said Brian McDonald, SBA District Director for Minnesota.
SBA officials are encouraging business owners to begin immediately applying for these loans, which will carry a 3.75 percent interest rate and offer terms that vary but could extend up to 30 years. (Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19). Click here to apply.) Find more information on the SBA’s Economic Injury Disaster Loans at SBA.gov/Disaster.
Officials said the EIDL approval process is expected to take between 18 and 21 days, with an additional two to five days needed to fund the loan. Officials said they were working to shorten these timeframes.
The EIDL program operates outside of the banking system, but SBA officials said they expected businesses to utilize their financial institutions to manage the flow of funds, meaning banks could anticipate an influx of deposits as these loans are funded.
Eligibility requires a business to have a credit history consistent with SBA guidelines, have demonstrated an ability to repay, and collateral (which may include the business owner’s personal pledge to repay). Forms required include a 2019 tax return, a 2019 P&L, a 2020 year-to-date P&L, and 2020 year-to-date sales figures.
There are an estimated 450,000 small businesses in Wisconsin and 530,000 small businesses in Minnesota that are eligible. Some businesses in Iowa and South Dakota, which operate in counties that border Minnesota, are also eligible for these disaster loans. Should a business be denied a disaster loan, SBA officials are required to reach out to these entities within 48 hours to either direct people to resource partners to find other assistance or help business owners improve their applications so they may reapply.
The EIDL program is being deployed independently of a plan put forth by Sen. Marco Rubio (R-FL) that would utilize the SBA’s 7(a) loan program to provide help to small businesses.
Loan applications will be accepted through the end of 2020.
Visit ICBM’s COVID-19 Information Center for other resources from SBA.
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