SBA Disaster Assistance Resulting from COVID-19
- Mar 27, 2020
In this episode of “The Bottom Line,” Tim Schuster, an advisor in EisnerAmper’s Private Business Services Group, discusses low-interest SBA loans for businesses impacted by the coronavirus. Tim explains the types of loans available, who qualifies, and how to apply.
Dave Plaskow: Hello, and welcome to the Bottom Line. This podcast examines the everyday business and finance issues faced by closely held and private businesses. I'm your host, Dave Plaskow, and with us is Tim Schuster, a senior manager in EisnerAmper's private business services group. Today we'll discuss, with Tim, COVID-19 and the SBA disaster assistance currently available. Tim, hello
Tim Schuster: Dave, good seeing you as always.
DP: So, let's get to the meat and potatoes, Tim. Tell our listeners a little bit about what the US Small Business Administration is doing during this public health crisis.
TS: Absolutely, it'd be my pleasure. Designated states and territories are being offered low interest federal disaster loans for working capital to small businesses suffering substantial economic losses due to the COVID-19 pandemic. The state or territory governor will need to request, if they haven't done so already, to be declared a disaster area. The SBA can issue an Economic Injury Disaster loan, which obviously in this current environment right now is substantially a large area of the United States .
DP:And who can qualify for the Economic Injury Disaster loan that you mentioned.
TS: Loans are available to small business and private, not-for-profit organizations in their respective designated areas. Please refer to the sba.gov website to see if you qualify.
DP: Okay, and what types of loans are available for businesses?
TS: So, the SBA Economic Injury Disaster loans offer up to $2 million in assistance and can be used to pay debt payables, payroll, and other bills that can't be paid due to loss in revenue. Interest rates are a maximum of 3.75% for small businesses, and 2.75% for not-for-profits. The SBA also understands there is a lot of uncertainty, and is willing to work with businesses on repayment terms up to 30 years. The financial conditions of each borrower will determine the length of the term of the note.
DP:Okay, and what's the application process for businesses?
TS: The website is easy to remember, sba.gov/disaster. And businesses can look up to see if there's an area that there is listed under COVID-19 coverage, and a business can apply online. We will add the link to the website for easy access.
DP:Okay, tell our listeners a little bit about the timing. When should people take advantage of these loans?
TS: Sure. If you're a business owner and are recognizing that you will have or will have significant negative economic impacts due to COVID-19, you should apply as soon as possible. Cash management is a large part of operating your business. The sooner you can receive the lifeline you need, the better off you will be. I already have had clients call me asking what they should do to obtain cash, and I have been discussing their lines of credit, and different SBA options with them.
I also want to note that daily and weekly the has been changing, and the government is releasing additional funds to help businesses and taxpayers alike during this difficult time. While this program is live, the government has other programs currently in discussion. Please, please refer to our Resource Center that is updating as we receive additional guidance. And before wrapping up this podcast, I'd like to add some final words. Please, please take time to check in on family, friends, and loved ones during this time of dynamic change. A call or a text messages can go a long way. I also want to thank the medical professionals on the front line.
DP:Amen. Well, thanks Tim for your information.
TS: You bet, my pleasure.
DP:And thank you for listening to The Bottom Line as part of the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this, and a host of other topics. And join us for our next EisnerAmper podcast where we get down to business.
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Mr. Schuster is a Senior Manager providing tax compliance services to individual filers, as well as assistance on tax returns for companies in the manufacturing and real estate industries.
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