During these uncertain times, our clients have looked to us to provide guidance on available options to help ease the financial burdens that many businesses will face. An avenue of economic relief is currently developing to assist many eligible small businesses (and possibly, not-for-profit entities) during the outbreak of the Coronavirus. We have summarized the relevant information below and will continue to be here to assist our clients during this difficult time.

• The affected state’s or territory’s Governor and the SBA’s Office of Disaster Assistance will work closely together to submit the request for assistance
• After the request for assistance is submitted, the SBA will issue, as provided for in H.R. 6074 enacted on March 6, 2020 (the Coronavirus Preparedness and Response Supplemental Appropriations Act), an Economic Injury Disaster Loan declaration
• The Economic Injury Disaster Loan declaration will make loans available to eligible small businesses within the state or territory covered by the Economic Injury Disaster Loan declaration
• Typically, the SBA determines an eligible small business on the following criteria:
• Most for profit small businesses
• Net profits need to be under $5,000,000 during the previous two tax years
• Net worth of under $15,000,000
• Owners must be U.S. citizens or non-U.S. citizens with permanent legal status
• Public policy requirement of creating or retaining jobs
• Does not engage in business that the SBA classifies as “ineligible”
• Economic Injury Disaster Loans could be available to not-for-profit companies based on recent press releases from the SBA
• Economic Injury Disaster Loans will provide up to $2,000,000 in assistance and can be used to pay fixed debts, payroll expenses, accounts payable, and other bills that are unable to be paid due to the economic impact of the Coronavirus
• Prospective borrowers should be prepared to submit documentation evidencing tangible net worth and average net income after Federal income taxes (excluding any carry-over losses) for the two (2) immediately preceding tax years (the SBA will verify all information via tax returns)
• For small businesses the interest rate will be 3.75% and for not-for-profit businesses the interest rate will be 2.75%
• Flexible payment terms of up to 30 years will be determined on a borrower-by-borrower basis

We will continue to monitor the Economic Injury Disaster Loan program and will endeavor to keep our clients up to date on any changes or rollouts that occur.