We have all gone through a number of forgettable events during our lifetimes, to include 9/11 and the Great Recession, and we can now add the Coronavirus to that list.
With the Coronavirus, we are presented with both a personal health and professional challenge. With regards to our health, we are being instructed at all levels of government on how to be safer, and the country is mobilizing right in front of our eyes.
On a professional front, the same fundamentals that drive free enterprise and have made the United States, will lead us through these times. Our calling is to educate, problem solve and to assist those who are business owners and those wanting to become entrepreneurs.
With that being said, the following is an update on Coronavirus SBA Funding Relief Programs as of March 18, 2020. We have been able to compile this information with the help of our lending partners.
Since we pride ourselves at VR as being advocates to small and midsize businesses, the more information we have, the more we can educate our clients. It is our calling; it is our responsibility.
There is still a lot of unknown on these programs, but with the new stimulus bill we will get a clear set of guidelines. Our lending partners have offered their assistance to answer any questions that may arise.
Last week the SBA implemented an Economic Injury Disaster Loan Program, which is providing small businesses up to $2 million in assistance at low interest rates, and up to 30 years. Here are the highlights.
· SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for a small business. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
· These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
· SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
A couple of days ago the SBA emailed out that business owners should apply online in the Disaster Loan Application Portal at disasterloan.sba.gov.ela/. The electronic loan application will be screened by their processing center when it is received. As of now borrowers are to go directly through the webite to request relief. You can see more information about the disaster program in these documents “SBA Disaster Loan Press Release” and “Facts about SBA Disaster Loans”. If you or anyone you know need to take advantage of this program, you can access the “Economic Injury Worksheet”, as this will help expedite the application with the SBA on information they will need.
The stimulus package that President Trump announced included $50 Billion in funds to be used for the SBA Program. Chairman Rubio proposed that the bill have several stimulus measures to be in effect for the duration of one year, including the following key provisions:
· Waives the ongoing fee for all lenders.
· Increases the guarantee on all 7(a) loans up to 90%.
· Increases the Express maximum loan amount to $1 million from $350,000, and after 1 year, lowers the maximum loan amount to $500,000 rather than the existing $350,000.
· Gives increased flexibility to the Economic Injury Disaster Loans (EIDLs).
If these points were included, this would be an important development as it pertains to future SBA offerings. You can expect to see further guidance disseminated in the near future.
And finally, if you or someone you know, may be looking to have payment deferments as your businesses are being negatively impacted by the Coronavirus. The SBA is allowing certain payment deferments in order to provide relief to the small business community. You can see highlights attachment “5000-20004” with the actual notice from the SBA. Please remember that banks need to do normal due diligence and provide some real information and data as to why this deferment may be needed.
If our office an be of any assistance, don’t hesitate to give us a call. We wish you and your families that very best during these trying times.