With the coronavirus relief bill on its way, we hope to see many dollars make their way to the many struggling small businesses that desperately need it! This is an early look at the SBA loan program designed for COVID-19 response and is based on our current understanding of the process, subject to change. It looks like a loan, not a grant like the BP Oilspill money, but there are provisions for some of it to be forgiven.
Two types of loans I want to focus on- Economic Injury Disaster Loan (EIDL) and Business Physical Disaster Loans (BPDL)
The EIDL is for small businesses and most nonprofits. It is used if the "business in unable to meet its obligations and to pay its ordinary and necessary operating expenses… Your loan amount will be based on your actual economic injury and your company's financial needs, regardless of whether the business suffered any property damage." It is meant for small businesses who are unable to get credit elsewhere. Payroll, sick leave, medical leave, rent payments, and utilities may be included and possibly even forgiven.
The BPDL is if you have experienced physical damage to your business not covered by insurance. By physical damage I am guessing they mean something along the lines of "contamination" by the coronavirus.
It is still unclear which insurance companies, if any, will pay a claim under Business Interruption Insurance for governmental shutdown or civil authority. Each insurance company will handle it independently and policy language varies. Talk to you insurance agent about placing a claim if you have Business Interruption.
Here's how you apply:
This is a summary of the information required:
- Type of Damage- Economic or Physical
- Type of business- LLC, nonprofit, etc
- Business name
- FEIN or Tax ID number
- Dba or business name
- Phone number
- Mailing Address
- Physical address
- Contact person
- More contact info
- Business Activity
- # employees
- Date business established
- Date current management came in
- Estimated loss amount- real estate, inventory, equipment
- INSURANCE policy info (call your agent)
- Owner's information
- Background questions
- Criminal record question
- For physical damage loans only
- Info on person filling it out for a fee (if you had somebody else do this for you)
They will also probably ask for:
- your personal and business tax returns
- a personal financial statement (THIS one specifically www.sba.gov/sites/default/files/forms/SBA_Form_413_7a-504-SBG.pdf)
- a schedule of liability (use this template https://disasterloan.sba.gov/ela/Documents/Schedule_of_Liabilities.aspx)
- A monthly sales breadown if you are filing an Economic Injury Disaster Loan (template found here https://www.sba.gov/sites/default/files/files/serv_da_all_loanapp_5_0_4.pdf)
- Authority to access your tax return by filling out this form (https://disasterloan.sba.gov/ela/Documents/Request%20for%20Transcript%20of%20Tax%20Return%20(IRS%20Form%204506T).aspx?ff=true&sp=1)
They MAY ask for:
- A nonprofit to provide this form https://www.sba.gov/sites/default/files/Disaster%20Business%20Loan%20Application.pdf
- Current year-to-date profit and loss statement
- Other things I can't predict
Upload the forms here:
If you need help, the SBA customer service number is 1-800-659-2955. If you are a current customer, contact us for your insurance information needed in question 16. If you are not a current customer, feel free to contact us if there is anything we can help with.
I wish the best for all of you, good luck and God speed!
This is not a comprehensive list of everything required and should not be taken as advice on whether or not to apply or a representation of the specific terms of the loan program. I encourage you to review the specifcs on the SBA website for more exact information.