SBA Offers Low Interest Loans to Illinois Small Businesses Impacted by Coronavirus
The U.S. Small Business Administration (SBA) is now offering low-interest federal disaster loans for working capital purposes to Illinois small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19) pandemic. SBA acted under authority provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act signed by President Trump in March, 2020. Such SBA assistance is available to small businesses located in the state of Illinois or in several specified counties in surrounding states. Here are some details:
♦ Loan Assistance Available: The loans are referred to as Economic Injury Disaster Loans (EIDLs). They are working capital loans to help small businesses (as well as most private, non-profit organizations) meet ordinary and necessary financial obligations that cannot be met as a direct result of the Coronavirus pandemic disaster. EIDLs cannot be used to refinance long term debts. The deadline to file EIDL applications is December 21, 2020.
♦ Credit Requirements: Applicants must have a credit history acceptable to SBA and must show ability to repay the loan.
♦ Loan Amount Limit: The law limits EIDLs to a maximum of $2 million. The actual amount of each loan is based on the economic injury determined by SBA. In determining the amount of the loan, SBA considers available business interruption insurance and potential contributions that are available from the owners of the business. SBA has the authority to waive the $2 million limit for borrowers deemed to be a major source of employment.
♦ Interest Rate: The interest rate is determined by SBA based on a specified formula, and it is fixed for the life of the loan. The maximum interest rate is 3.750%.
♦ Loan Term and Repayment: SBA will determine an appropriate loan term and installment payment amount based on the financial condition of the applicant. The maximum loan term is 30 years.
♦ Collateral: Collateral is required for all EIDL loans over $25,000. Real estate when available is acceptable. Although SBA will generally not decline a loan for lack of collateral, it will require the borrower to pledge available collateral.
♦ Insurance Requirements: SBA may require an applicant to obtain and maintain appropriate insurance.
♦ Loan Eligibility Restrictions: Applicants who have not complied with the terms of previous SBA loans may not be eligible. This includes borrowers who did not maintain required flood and/or hazard insurance on any previous SBA loan.
Further information: Applicants may apply online, receive additional disaster assistance information and download applications at https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email firstname.lastname@example.org for more information on SBA disaster assistance. Di Monte & Lizak is here to help you with all your small business legal needs during these unprecedented times. Please feel free to contact us with your questions and concerns.