Small businesses, nonprofits can get up to $2M to help them pay bills, meet payroll
By Tammye Nash | Managing Editor
As governments are issuing disaster declarations shutting down whole cities, counties and states in an effort to slow the spread of the COVID-19 epidemic, small businesses are struggling to stay alive. The U.S. Small Business administration is stepping into the gap, making available $50 billion in “disaster economic injury loans” available to small businesses and nonprofit organizations, according to Ahmad Goree, a lead economic development specialist and public information officer for the SBA.
“As the name says, these are loans to help these small businesses and nonprofits recover from the economic injuries they are suffering because of this disaster [the COVID-19 pandemic],” Goree said. “These are loans business and nonprofits can use to help pay their rent, pay utilities, pay insurance and make payroll.”
Goree said applicants can get loans of up to $2 million, and they have up to 30 years to repay the loan. The interest rate for for-profit businesses is 3.75 percent, and for nonprofits, it’s 2.75 percent.
The first payment can be deferred for a year, and Goree said Congress is considering legislation that would allow a portion of the loans used to cover payroll to be forgiven under certain circumstances.
“We are going to be looking at expense reports and financial statements to see what expenses [applicants] need help in covering,” Goree said.
“But certain documents are being waived. For instance, the IRS form 4506T is being waived at the time of application for for-profit businesses, although it’s still in place for nonprofits. Tax returns are being waived at the time of application for for-profit businesses, although we may ask for them later. Those are still in place for nonprofits, too, though.”
Goree also noted that these are “not like traditional loan programs. This money is dispersed directly from the Treasury, so there are no fees associated with these loans.”
These loans are available to businesses and nonprofits that qualify as “small” based on the SBA size standards, and that can vary based on the industry., Goree said. SBA typically defines as small business as one with fewer than 500 employees, “but it could be revenue based, depending on the industry you’re in.”
More information on size requirements is available at the SBA website, SBA.gov.
There are several ways to apply, Goree said, adding that SBA officials are “strongly encouraging” interested businesses to apply online, again at SBA.gov. Businesses can also print out the application form found online, fill it out and mail it to the Small Business Center at 14925 Kingsport Road, Fort Worth, Texas, 76155, or they can apply over the phone at 202-205-6734.
“We have been getting inquiries from many businesses that need assistance right now. I talk to businesses every day, throughout the day, that don’t know how they are going to make it through this,” Goree said. “This is a way we can help, and I feel very strongly that we will be able to help a large number of businesses get back on track.
“We hope every small business and nonprofit that needs help will reach out and apply for one of these loans,” he added. “These are your tax dollars at work, so put them to good use.”