On Wed. March 18th, SBA approved Governor Cooper’s request for a disaster declaration for all NC counties, making SBA disaster assistance loans available to NC’s small business owners dealing with the economic difficulties created by COVID-19. Eligible applicants may apply for Economic Injury Disaster Loans immediately.
We’ve done our best to summarize the info. Be sure to check the links and reach out to the resources below as we might have missed something.
SBA Overview of COVID Relief Programs available to small businesses
SBA Powerpoint about relief programs
Here are some details on the process small businesses will follow to apply for a disaster loan through SBA:
What are SBA disaster loans?
What businesses are eligible to apply?
- SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses, small agricultural cooperatives, small aquaculture businesses and most private non-profit organizations to help meet working capital needs or normal business operating expenses through the recovery period.
- The deadline to apply for an Economic Injury Disaster Loan is Dec. 18, 2020.
What is the criteria for a loan approval?
- Credit History: Applicants must have a credit history acceptable to SBA.
- Repayment: SBA must determine that the applicant business has the ability to repay the SBA loan.
- Eligibility: The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons.
Here’s what you can do to prepare for your application:
Gather the following information:
- Complete copy, including all schedules, for the most recent Federal Tax Return
- Year-End Profit & Loss Statement
- A current year to date Profit & Loss Statement
- Monthly break down of sales figures
Get Familiar with the Necessary SBA Forms:
- Completed SBA loan application (SBA Form 5 for business) or (SBA Form 5C for sole proprietor)
- Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates (20% Owners/GP/50% Affiliate)
- Schedule of Liabilities (SBA Form 2202)
- Personal Financial Statement (SBA Form 413). 20% Owners/GP
- Additional Filing Requirements (SBA Form 1368) providing monthly sales figures. (This is especially important for Economic Injury Disaster Loans.)
How much can I borrow?
- Eligible entities may qualify for loans up to $2 million.
- The interest rates for this disaster are capped at 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.
- Eligibility for these working capital loans are based on the size (must be a small business) and type of business and its financial resources.
How can I use the loan funds? What are the collateral requirements?
- Economic Injury Disaster Loans over $25,000 require collateral.
- SBA takes real estate as collateral when it is available.
- SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available.
- These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion.
How long does it take to get approval?
- The stated goal of SBA is to arrive at a decision regarding loan approval within 2 – 3 weeks. However, the timeline can be much longer due to the SBA’s need for damage verification and additional documentation of various types.
How does a business apply?
Please see Three_Step_Process_SBA_Disaster_Loans
You can apply online via the SBA’s secure website: disasterloan.sba.gov/ela.
Tips for applying:
- Submit as soon as possible. There may be delays in SBA response so the sooner you can complete your application the better.
- Recheck the filing requirements to ensure that all the needed information is submitted. The biggest reason for delays are incomplete applications. Incomplete may also lead to your request being rejected.
- It is strongly advised that all businesses work with a local business resource provider to make sure a complete application is submitted.
Small business owners are encouraged to call Business Link North Carolina (BLNC) at 1-800-228-8443
- BLNC staff are available Monday through Friday, 8:30 am – 4:00 pm. Se habla Español si es necesario.
- Call volume in BLNC is expected to be high, and callers may need to leave a message and await a returned call.
- BLNC counselors will gather basic information from callers and refer the case to the most appropriate resource for assistance – small-business experts with either the Small Business Technology Development Center (SBTDC) or the state’s Small Business Center Network (SBCN).
- SBTDC and SBCN small-business counselors will assess needs – working, for example, to assist with the preparation of any SBA loan application materials that may be appropriate.
What resources are available to help with this process?
- Business owners should inquire with their primary bank first to begin restructuring their current loans as well as having conversations with their landlord about potential rent deferment if necessary.
- The following organizations provide assistance to small businesses and can provide guidance and assistance in preparing your SBA disaster loan application or assembling financial packages for local lenders. Email and phone counseling are available.
Want to know more: See this presentation from the SBA