These are low interest loans to small businesses and nonprofits that have been severely impacted by the COVID-19 crisis. These are capital loans of up to $2 million with interest rates of 3.75% for businesses and 2.75% for nonprofits both for a term of 30 years designed to help small businesses overcome loss of revenue.
While SBA loans have been available for some time, it is unprecedented that the entire United States is in a state of emergency and considered a disaster at the same time. Therefore, the SBA has decreased the requirements to access these loans and increased the type of businesses that can access them. For instance, the SBA is no longer requiring that businesses proof they cannot obtain financing from other places not that they proof economic injury. The SBA is working under a national presumption of economic loss and shortage on cash flow. The totality of the funds used for the following expenses will not have to be repaid:
- Providing paid sick leave to employees unable to work due to the COVID-19 pandemic;
- Maintaining payroll to retain employees during business disruptions or substantial slowdowns;
- Meeting increased cost to obtain materials unavailable due to the disruption of the supply chain;
- Rent or mortgage payments;
- Repaying obligations that cannot be met due to revenue losses directly connected with the COVID-19 pandemic.
The deadline to apply to this loan is December 21, 2020 and although the application has been streamlined and the requirements on documentation have been waived or significantly relaxed, the applicant is self-authenticating the veracity and truthfulness provided to the federal government under penalty of perjury. Moreover, recipients of these loans have the duty to keep documentation and records indicating that the funds where used in the pre-approved expenses to be able to obtain loan forgiveness. You must go through a SBA approved lender for this loan.