As part of its initial response to the current and anticipated impact of COVID-19 on businesses across the nation, Congress has passed and the President has signed an $8.3 billion supplemental funding bill that includes authority for the Small Business Administration (SBA) to issue up to $7 billion in low-interest loans under its already existing Economic Injury Disaster Assistance Program (EIDL) to small businesses adversely impacted by the outbreak. The administration has announced its intention to ask Congress to increase SBA’s resources for small business disaster assistance related to COVID-19 to $50 billion. We expect funding amounts to increase and complementary initiatives to be implemented as the full economic impact of the outbreak makes itself felt.
While certain details on eligibility and process are still being worked out at the SBA, at this time we can share the following information with our clients:
Purpose and Principal Terms
- Funding is intended to permit an adversely impacted business to maintain a reasonable working capital position so it may meet its obligations in respect of operating expenses.
- Loans may be issued up to a principal amount of $2 million, interest rates are expected to be at or below 4% and be for a term not in excess of 30 years.
All of the following conditions must be met:
- The business must be located in within a geographic area declared to be in a “state of emergency” by reason of the pandemic.
- If a county, its local authorities must file information with the SBA to demonstrate that at least 1 of its businesses has suffered economic injury. If the filing is approved by the SBA, businesses in adjacent counties will also be eligible for assistance. If the geographic area is a state, state authorities must demonstrate that at least 5 businesses within the state have been injured.
- The business’ annual receipts or number of employees must not exceed the thresholds for participation (they vary by industry type).
We encourage our clients, in particular those in the restaurant, arts, entertainment, recreation hospitality and transportation industries, to monitor developments regarding this and other potential opportunities to secure credit and participate in business support programs during these challenging times. If you would like more information you may contact either of Rafael A. Ruiz-Ayala email@example.com or Stephen Shapiro, firstname.lastname@example.org.