More help for small businesses: If your state requests status as a â€œdeclared disaster area,â€ you may be eligible for low-interest federal disaster loans for working capital, provided your small business suffers substantial economic injury as a result of COVID-19. Efforts from the U.S. Small Business Administration (SBA) will allow businesses within these disaster zones to apply for an Economic Injury Disaster Loan for up to $2 million, provided they also meet certain SBA eligibility requirements, including SBA size standards.
Your business or private nonprofit organization will also need to be within an eligible industry based on SBA standards. The Economic Injury Disaster Loans can be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid due to the disasterâ€™s impact. Presumably, eligible uses of proceeds would include rent payments and, possibly, loan payments. Although, it is not expected that the loan could be used to refinance other loans. Specific guidance has not been provided as to the calculation of the amount of fixed expenses that will be allowed.
More information on which states are now eligible can be found here, as well as parameters on interest rates and terms, and, if you qualify, access to the loan application portal. Keep checking the site to monitor changes as the spread of the pandemic continues and more states apply for this relief.
For more information on this or other related matters, please contact REDW Principal Sandy Abalos.
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