This is a fast primer on applying for the SBA disaster loans. We are located in Illinois so there are some state specific resources, but other states will have them, too. We’ll try to update this with more information.

SBA has authorized loans for businesses affected by Covid-19

State governor must declare a disaster and that the cause of the disaster is Covid-19. Pritzker has done this. SBA Administrator has to approve the declaration.  Apply Here: https://disasterloan.sba.gov/ela/Information/ApplyOnline

Type of Loan
    1. Working Capital to pay normal business expenses, up to $2 milion. But, the maximum unsecured loan amount is $25,000.
    2. Available for Small Businesses (defined below).
    3. Interest
      • 75% for for-profits
      • 75% for not-for-profits
    4. Repayment terms
      • Up to 30 years
      • No payment for 1 year
Who is Eligible – Small Businesses

A “Small Business” is one that fits underneath the maximum sizes – sort of like a too-big-to-ride sign at a carnival.

  1. Size Test Based on Industry / NAICS Code:
    • Retail or Service – ≤$7.5-8 million average annual receipts
    • Manufacturing – ≤500 employees
    • Wholesale – ≤100 Employees
  1. Alternative Measures (If you don’t qualify for Size Based on Industry)
    • Maximum Tangible net worth – ≤$15,000,000
    • Average net income after fed income taxes – ≤$5,000,000
  2. Not Eligible
    • Farms
    • Churches
    • Gambling
Criteria for Loan

Like every lender, the SBA has criteria for evaluating you and your business for creditworthiness.

  1. Credit You have to have some credit history for your business and for the owner(s).
  2. Repayment Ability. You have to show you have a history of cash flow to repay the loan. But, for younger businesses, you just have to show some evidence of likelihood of repayment.
  3. Suffered working capital losses due to disaster. You have to show you’ve suffered losses due to the Covid-19 disaster.
  4. Collateral required for loans in excess of $25,000. But, SBA says they don’t turn down loans for lack of capital.
10 Documents to Apply for Disaster Loan

There are essentially 10 documents you need to fill out the application. Except for the Loan Application, you should gather all of these before you get started.

1.        SBA Form 5 (Loan Application)
2.        Balance Sheet & Profit and Loss Statement – prior year
3.        Profit and Loss statement – year to date
4.        Business FEIN/Federal Tax ID No.
5.        SBA Form 2202 (Schedule of Liabilities)
6.        SBA Form 1368 (Monthly Sales Figures)
7.        IRS Form 4506T (Tax Information Authorization  – Need for applicant, principals, owners and affiliates)
8.         Business Federal Income Taxes
–> Option 1. Federal income tax return for business – most recent.
–> Option 2. If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year.
9.        SBA Form 413 (Personal Financial Statement of each owner and principal)
10.      Personal Federal income tax return for all principals and owners – most recent.

To Apply

Apply Here: https://disasterloan.sba.gov/ela/Information/ApplyOnline. SBA says filling out the form online is the fastest process. The turnaround is a month – 21 days to process, 1 week to close. So, apply quickly.

For Help…
Small Business Development Center (“SBDC”) – Find: by county sbdc
Links to Econ Development organizations
SBA
Seasongood Law, Inc.