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The U.S. Small Business Administration promises to decide as quickly as possible on loan applications from small businesses hurt by the coronavirus and COVID-19 pandemic.
In Indiana, for example, the SBA as of Thursday was deciding on loan applications within two days of that state receiving a declaration for Economic Injury Disaster Loans, said Rob Scott, the SBA’s Great Lakes regional administrator.
“As of right now, it’s been fairly quick,” Scott said during a media conference call this morning. “As of right now, we are turning through (applications) at a rapid pace.”
The Small Business Administration on Thursday afternoon approved a statewide Economic Injury Disaster Loan declaration for Michigan, unlocking low-interest loans for small businesses in the state.
As the loan program gets more applications and more states are approved to participate, local SBA offices have been told the entire application and review process will take 18 to 20 days, with the disbursement of funds within another three to five days, Scott said.
The SBA takes “an all-hands-on-deck approach” to administering the loan program, according to Scott.
In an SBA region that covers Michigan and Ohio, “every single employee for the SBA in the field is solely focused now on economic recovery for our areas,” he said.
“It’s a complete team approach among all levels of government to get these done and help small business owners,” Scott said. “I cannot implore how much of an effort is being put into this from the Small Business Administration. Certainly, this is something historic for our country, this national occurrence.”
Small businesses can qualify for up to $2 million in low-interest loans from the SBA, which were made available earlier this month under $1 billion approved by Congress to help companies overcome the temporary loss of revenue. The loans are available for small businesses, small agricultural cooperatives and nonprofits seeing losses amid the coronavirus pandemic.
Small businesses can use SBA loans to pay fixed debts, payroll, accounts payable and other bills they are unable to pay because of the crisis.
Loans are available for up to 30 years at an interest rate of 3.75 percent, and 2.75 percent for eligible nonprofit organizations. The loans are targeted toward small businesses that are unable to secure emergency credit elsewhere and “they don’t have anywhere else to turn,” Scott said.
“This program is certainly going to bring relief for the small businesses that are hurting out there,” he said.
Applicants will need to provide information such as a tax authorization form so the IRS can share tax information with the SBA, their most recently completed federal tax return, the most recent annual profit and loss statement, and a balance sheet, said Ed Garner, regional director of Michigan Small Business Development Center.
The SBA loans come with an initial four-month payment deferral once money is disbursed to approved small businesses, Garner said.
“So you don’t have to repay those loans right away,” he said in a Thursday afternoon webinar hosted by the Grand Rapids Chamber of Commerce.
The SBA will not deny applications strictly from lack of collateral and will judge applicants based on credit history and the ability repay loans, Garner said.
Eric Seifert, the owner of Left Coast Capital Resources LLC in Muskegon, was already assisting small business owners on SBA loan applications before Thursday’s declaration. Seifert expects the SBA will get flooded with applications from small businesses that were affected by the pandemic or have been forced to close down by the state’s executive order and are now struggling to survive.
“This is going to be a gazillion of applicants,” Seifert said. “It’s going to be a huge demand because can you think of businesses that aren’t affected by the shutdown. It’s just so widespread.”
Scott said during today’s conference that the SBA is prepared to handle that demand. He notes that two years ago, the SBA handled three straight hurricanes that hit the U.S. “and it totally prepared our disaster program to handle the intense volume that comes with that.”
The SBA is working with organizations such as the Michigan Small Business Development Center and local chambers of commerce to assist small businesses seeking a loan and to provide information. The agency has been hosting webinars on eligibility and the application process and will offer them “to anyone and everyone that will host us so that we can get in front of them to talk about this program for small business owners out there,” Scott said.
The SBA or a partner such as the SBDC will contact applicants whose loans request gets denied within 48 hours to explain why and “then put them in a position so that they can come back to us and get approved, if necessary, or offer other resources that will help them.”
News coverage in the small business section of MiBiz is made possible by advertising support from the Small Business Association of Michigan. SBAM is the statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. This advertisement has no effect on editorial consideration in MiBiz.