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We thought this resource might be of interest to you and your clients.  We have outlined some of the programs’ important aspects.

The U.S. Government has authorized much needed financing for small businesses during the Coronavirus crises.  Through the Small Business Administration (SBA), Economic Injury Disaster Loans for Coronavirus related economic disruptions are being made available to small business across the country.

This is different from ‘normal’ loan application processes.  Go direct to SBA, not to your bank

What you need to know

  • Loan Amounts: Up to $2 million
  • Loan Proceed Uses: Working capital loans and lines of credit 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.
  • Eligible Businesses: Small businesses, small agricultural cooperatives, small aquaculture businesses, most private non-profit organizations.
  • Underwriting Criteria: Based on Credit History & Repayment Ability.
  • Collateral: Not required for loans less than $25K.  SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available.
  • Rates: 3.75% and 2.75% (private non-profits).
  • Term: 15 or 30 years based upon business’s ability to repay.
  • Loan Fees:  No cost to apply for these loans.
  • Application Process:   You can start and stop your application – make sure you save.  Create a username and PW (if you lose your password, SBA can’t tell you – you have to start over).
  • How to Apply: SBA Disaster Application Portal
  • Forms Needed to Apply: Need help completing your forms?  Contact your local Small Business Development Corporation (SBDC) office.

Important Notes

  • It’s a “first-come, first-serve” approach.
  • You are applying for Economic Injury loans.
  • Tax Return (TR) Requirements:  TR submission requirement is waived for loans less than $500K (if loan is over $500K, you must upload the most recent tax return). Does not apply to non-profits.
  • 1-year Interest deferment – but interest accrues the day funds are dispersed.
  • No prepayment penalty.
  • Time to approve your loan requestaverage time is 3 weeks.
  • Business must be in operation for a minimum of 1 year.
  • Personal guarantee – most likely will require the principal(s) to personally guarantee.
  • 4506-T Tax Authorization – Authorizes the release of the applicant’s tax transcripts (applicant, principals, affiliates) – (name of the tax return has to match the name on the form otherwise it will reject).  Form 4506-T can be signed electronically through portal.
  • Complete all sections with a red ‘*’ (asterisk).

You do not need to take the cash if the financing is granted, but you might consider doing so to strengthen your financial condition and position your company for a more sustainable future at the other end.

While Destined does not process SBA loans, please let us know if and how we can be of service to you and your company during this period of transition.  The Destined team is leaning in with their clients to help them through this survive phase, being true to their purpose of helping business owners achieve their destination and realize their life’s work.  Watch for our future articles about preparing for life after crises.

Stay healthy financially and physically.

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