SBA Loans (PPP, EIDL) - What are They and Who can Apply?
Our nation's small businesses are facing an unprecedented economic disruption due to the Coronavirus (COVID-19) outbreak. On Friday, March 27, 2020, the President signed into law the CARES Act, which consisted of billions of dollars in relief programs for American workers and small businesses.
As we work through these unprecedented times, the government continues to provide many programs and resources to help small businesses stay afloat. Even after trillions of dollars have gone out, they appropriated even more funds into some of these programs. A few key programs they have launched include the Small Business Association’s (SBA)’s Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL) and the Save Small Business Fund (more details below). Unfortunately, at this time, the needs continue to outweigh the funds available.
Paycheck Protection Program
More funds available as of 9:30am CST, 4/27/2020: The PPP is a loan designed to assist small businesses in continuing to pay their employees, even though revenue may be limited or completely stagnant during this Stay-At-Home period. If all employees are kept on the payroll and the money is used for payroll, rent, mortgage interest or utilities, the SBA may forgive these loans in full. Please see the website links at the end of this article for further details about loan forgiveness and qualification.
Where can you apply? Qualifying businesses may apply at any lender approved by the SBA to fund these loans.
Who can apply? Your business may be eligible if you meet SBA’s size standards, if you are a business, non-profit organization, veterans organization, tribal business concern with less than 500 employees or if your business code begins with 72 (accommodations and food services) and have more than one physical location and employs less than 500 employees per location. Sole proprietors, independent contractors and self-employed persons may also be eligible to apply, though they had to wait a week after the program was rolled out before doing so. Businesses in certain industries may have more than 500 employees, yet still qualify, if they meet the SBA’s size standards for those industries.
Economic Injury Disaster Loan
OUT OF FUNDING: The EIDL Loan is a working capital loan designed to assist small businesses that choose to continue operations within a designated disaster area throughout the disaster recovery period. Its details are substantially different than the PPP loan. The only forgivable part of the loan is the first $10,000, taken as an “EMERGENCY ADVANCE”. Any funds in addition to that must be paid back over terms of up to 30 years. In addition, any loans over $25,000 require collateral of some kind, though the SBA says they will not decline a loan for lack of collateral, alone. For an EIDL loan, the maximum rate is 3.75%. Also, the loan limit has a max of $2,000,000, though even this limit may be waived if the SBA deems the business as a major source of employment. Lastly, this loan is applied for directly through the SBA and not any lending institution.
Where can you apply? 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 [email protected] for more information on SBA disaster assistance. Individuals who are deaf or hard-of-hearing may call (800) 877-8339. Completed applications should be mailed to U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
Who can apply? Your business may be eligible if you employ less than 500 employees (including Sole proprietors, independent contractors, and self-employed persons), as well as non-profit organizations and Veterans organizations. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Save Small Business Fund
OUT OF FUNDING: The Save Small Business Fund is a program that designates funds to businesses in economically vulnerable communities. It has been offered through the US Chamber of Commerce.
Where can you apply? Through your local Chamber of Commerce.
Who can apply? Your business may be eligible if you employ between 3 and 20 people, you are located in an economically vulnerable community, and have been financially harmed by the COVID-19 pandemic.
How we currently fit in with the SBA
As of Friday, April 24th, IAA Credit Union was not authorized to participate in SBA lending. Therefore, we have not had the necessary SBA approval to access or offer the PPP nor the EIDL funds to our membership. Although historically IAACU has not partnered with the SBA, we are working hard to gain their approval. In the meantime, we urge our members to keep their eyes and ears out for changes in our SBA status, renewed funding of SBA programs, additional locally issued grants and loans, and/or changes to various government stimulus programs. Although the noted programs in this article have all recently ran dry of funds, we anticipate that there will be more funds allocated to government lending programs such as the EIDL and the PPP by the time this article is published.
IAACU’s Membership Value
We continue to offer flexible loan terms and aggressively low rates on all our conventional business and consumer loans. Right now, we are offering to lower any member’s auto loan rate, currently at another institution, if they are willing to bring the loan over to us. The credit card rates we offer our membership are well below market rates. Our mortgage rates and personal loan rates compete with any of the lowest rates being offered, anywhere. If it has been a while, please check out our website and scroll through our product and rate offerings. We feel you will be very impressed at what you find. In short, we strive to provide the best value, bar none, and we remain committed to being the VERY best!
If it has been a while, please check out our website and scroll through our product and rate offerings. We feel you will be very impressed at what you find.
IAA Credit Union: https://www.iaacu.org/coronavirus#business
US Treasury CARES Act: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
US Treasury PPP: https://home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf
US Chamber of Commerce: https://savesmallbusiness.com/