SBA Economic Injury Disaster Loans for Small Businesses

Last updated March 24, 2020

In response to COVID-19 and its impact on small businesses, the U.S. Small Business Administration (“SBA”) issued new guidelines to begin providing Economic Injury Disaster (“EID”) loans to qualifying small businesses suffering substantial economic injury as a result of the COVID-19 crisis. These working capital loans are designed to help small businesses and most non-profit organizations meet their ordinary and necessary financial obligations during the pandemic. The terms of the EID loans are determined by the SBA on a case-by-case basis, based upon each borrower’s ability to repay. Generally, the maximum amount of an EID loan is $2 million with an interest rate of 3.75% for small businesses and 2.75% for nonprofit organizations, and a maximum term of 30 years. Funds from an EID loan may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid as a result of the pandemic’s impact.

In order for a company to qualify as a “small business,” such company must be independently owned and operated, not be dominant in its field of operation, and not exceed the relevant small business size standard under SBA regulations (at 13 C.F.R. Part 121), which is usually stated in company’s number of employees or average annual receipts and varies by industry. The SBA assigns a size standard to each NAICS code and maintains a website where one can enter the NAICS code for its business to find the corresponding size standard and preliminarily determine whether it may qualify as a “small business.” For purposes of determining whether a company is eligible for an EID loan, businesses may also be required to provide supporting documentation to the SBA, including company’s most recent tax returns, financial statements, and a schedule of liabilities that lists all current debt.

Small businesses in all U.S. states and territories are currently eligible to apply for EID loans. Applicants may apply online, receive additional disaster assistance information, and download applications.

We will continue to keep you updated on additional opportunities to help your business during the coronavirus pandemic.

For additional information pertaining to the coronavirus outbreak, please visit CSG’s COVID-19 Resource Center.

This publication contains general information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Attorney Advertising. Prior results do not guarantee a similar outcome.

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