Amidst the trying and hectic times, SBA disaster loans can help businesses find a
solution to stay above water.
With the nation-wide quarantine in effect, many small businesses are wondering how they can protect their employees, business, and themselves. The Small Business Association has several options and recommendations on how to proceed. This blog will cover what you need to know about what the SBA loan is and how the process works.
For more information on this topic or to apply for an SBA loan, visit sba.gov.
The Current SItuation
The New York Times reports on March 29, 2020, President Trump stated that social distancing guidelines from the federal government would last until April 30. While the quarantine on what businesses can or cannot open is a decision of the state’s government, small businesses need a more lucrative solution than waiting around.
With the number of confirmed cases in the US reaching 163, 539 as of March 31, 2020, and expected to continue climbing. According to the Centers for Disease Control and Prevention, CDC, it is crucial for businesses to develop a plan. Business owners may not even realize that they do not need to experience a disaster to qualify for an SBA disaster loan.
Understanding What an SBA Disaster Loan Is
The SBA explains on their website that, “The SBA offers disaster assistance in the form of low-interest loans to businesses, renters, and homeowners located in regions affected by declared disasters.” A major concern for small and large businesses across the country involves being able to pay bills along with employees’ payroll.
By filing for a SBA disaster loan, you can use it to:
- Pay fixed debt payments
- Cover payroll
- Cover accounts payable
- Pay bills
While there are certain stipulations and requirements a company needs to meet for an SBA disaster loan, the loan can cover a max of $2 million for economic injury. This way, businesses can support their employees and their company’s infrastructure during this time.
Qualifying for a Loan
When it comes to qualifying for an SBA disaster loan, SBA.gov states that any business with less than 500 employees in the United States that cannot pay bills due to COVID-19. With most companies and industries on hold, much of the economy’s flow is stopped. This ripple effect is causing a variety of issues for various businesses.
In most cases, the interest rate for a small business will be 3.75% and 2.75% for small businesses. The eligibility for the exact amount of this loan will depend on the size and type of resources. The SBA will also take any financial resources the business has.
Applying for The Loan
While it is possible to fill out a paper form and apply in person, it is faster and recommended by the SBA to apply online at their website. After applying for the loan, you can print it out to keep a copy for yourself. In most cases, it can take anywhere from two to three weeks with a disbursement of $225,000 available within five days of approval.
If you need immediate assistance or funds, you can request an emergency advance within three days of receiving the application to the amount of $10,000. The sooner people act and apply for this loan, the more likely they will be able to have the necessary funds for themselves, their business, and their employees.
Included Loan Forgiveness
Another factor to consider when applying for a loan is the possibility of loan forgiveness. With an SBA disaster loan, there is partial loan forgiveness. Loan forgiveness may be possible with issues involving payroll costs, interest payments on a mortgage, along with rent payments for a lease that was in effect prior to February 2020.
However, there are limits to the amount of forgiveness for the loan. During the application process, you can request assistance from SBA. Our team can also help provide guidance when necessary. The SBA also will go into detail about the loan and the process.
Professional Guidance from Our Team
At Doctor Genius, our team works with finance and lending experts who can help you understand this process. Our team can provide guidance and how to proceed for your practice’s best interests. Along with this guidance, Doctor Genius is hosting webinars with other professionals in the field to address topics related to COVID-19 and its impact on medical practices.
Call us and learn more about what we can do for you in this crisis and how you can take a proactive approach to save your practice.
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