SBA Offering Low-Interest Loans for Businesses Hurt by Covid-19

The aviation industry will be challenged by Covid-19.  Many of the companies that will experience significant short-term challenges are small businesses, and small businesses often have more limited options when it comes to accessing short-term capitol in challenging times.  In response to this concern, Congress passed additional authority for SBA to make loans to those affected by Covid-19, and the Small Business Administration announced that it will be making capitol available in the form of low-interest federal disaster loans.

Funding comes from the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Trump.

The loans are intended to be used for working capita.  Examples of things you can do with the loan-money include:

• paying fixed debts
• making payroll
• paying accounts payable
• paying any other bills that cannot be paid because of the impact of COVID-19

SBA loans are available with long repayment terms in order to keep payments affordable.  In some cases, payments can be spread out over a maximum of 30 years.  Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

The interest rate is 3.75% for small businesses without credit available elsewhere and 2.75% for nonprofits.  Businesses with credit available elsewhere are typically not eligible for this program.  These loans appear to have a cap of $2 million.

Your state has to qualify for federal funds.  A state must submit documented business losses for at least five businesses per county to qualify for the program.  So one way that you can help the process is to work with your state on this filing.

For additional information, you can contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov (link sends e-mail).  The disaster declaration just happened on Friday afternoon so the SBA doesn’t even yet have Covid-19 listed as a formal disaster declaration on their website (but SBA has issued a press release confirming Covid-19 assistance, and also has a Covid-19 information page).