On March 12, 2020, the U.S. Small Business Administration (SBA) announced the creation of a disaster assistance loan program to make “Economic Injury Disaster Loans” to COVID-19 impacted businesses. Some of the key elements of this disaster assistance program are:
These loans are not available everywhere (yet), nor are they available to all impacted small businesses. First, the loans are only available to businesses that have exhausted their access to other credit. Second, the loans are being offered only to small businesses in states and territories that will be designated for this relief upon the request of that state or territory’s governor. These areas can be located at this link: https://disasterloan.sba.gov/ela/Declarations/Index
As of March 16, 2020, the SBA has not added COVID-19 states or territories to its list of federal or SBA Declared Disaster zones, but this should change as the SBA staff works to update the page and state governors make their requests.
If you have never considered applying for an SBA loan or taken advantage of its resources, now may be the time. If you need or may need disaster assistance, now is the time to look into a disaster assistance loan. You should expect that the SBA is going to be resource-strained for the foreseeable future. If you need or may need SBA loan or disaster assistance, you should act now, before a line forms.
The following are some links to SBA information on its loan programs and COVID-19 relief program:
Smart business owners should get ahead of the financial challenges that they are sure to face over the coming weeks and months. However, at the same time, they should also recognize that the government is already taking unprecedented measures to safeguard the economy and there is reasonable cause to believe that help is on its way – particularly if you know how to seek help.
[For information about how to deal with contractual obligations your business may not be able to honor because of COVID-19, read Force Majeure Clauses in the Age of Coronavirus. For five things every business should be doing to protect itself during the pandemic, read You Will Survive! How Your Business Will Survive Coronavirus – a Crisis Management Plan, by Financial Poise Publisher Jonathan Friedland. You may also want to attend the following webinars: Borrower or Lender Be and What Kind of Loan?.]
©All Rights Reserved. March, 2020. DailyDACTM, LLC d/b/a/ Financial PoiseTM
Mark S. Melickian leads the Restructuring, Insolvency, and Special Situations (“RISS”) group at the Sugar Firm (Sugar Felsenthal Grais & Helsinger LLP), a national business-focused law firm boutique with offices in Chicago and New York. The RISS Group advises businesses facing market and liquidity challenges, whatever the cause, and those pursuing business opportunities in the…
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