US Small Business Administration (SBA) helps small business in managing working cash flow with SBA Disaster Loan for Covid-19. Learn how to fill the loan application online correctly to get fast loan approval.
What is SBA Disaster Loan ?
SBA Disaster Loan is the loan for working capital to small business. So that Business can survive during the Covid-19 Pandemic. You can consider it as a working capital loan with the help of SBA. It is called a Covid -19 Economic Injury Disaster Loan (COVID 19 EIDL).
Who is eligible for Covid 19 EIDL?
- US small business including the proprietor, an independent contractor can apply for an SBA loan for Covid 19.
- Applicant should not have more than 500 employees.
- The business has more than 500 employees but considered small as per SBA standard rule.
- Non-profit can apply for this loan.
Who cannot apply for Covid 19 EDIL?
- Applicant engaged in illegal activity
- Agriculture enterprise is other than an aquaculture enterprise, agricultural cooperative or nursery.
- Applicant involves with a live performance of a prurient sexual nature directly or indirectly
- An applicant with more than one-third of gross annual revenue from legal gambling activities.
- An applicant with a lobbying business.
- Government entity or member of congress.
For what purpose is the SBA Disaster loan used for?
The SBA loan is for working capital. You can use it for payroll payment, rent, payment to supplier and any other expense which is vital for your business to continue.
What is the interest rate of the SBA Disaster Loan?
The interest rate of an SBA loan is 3.75% for business. If you are a non-profit, it is 2.75%. The very big relief regarding this loan is the repayment schedule. SBA allows 15 to 30 years for repayment which is a really big period.
What is the Loan Limit of SBA Disaster Loan?
SBA Loan limit is $2 million. However, your loan officer will determine the loan amount as per your working capital requirement. He will review your past 12 months of financial data and assess the required amount.
What is a $10000 SBA EIDL Grant?
$10000 SBA grant is part of the CARES act. SBA grant is the grant given to Covid 19 affected businesses to help them survive until the SBA Disaster Loan gets approved. So if you are affected by the corona pandemic, you will be eligible for the grant.
Please note that the grant is not repayable as the name says. You may get the grant although you get rejected for SBA Disaster Loan.
So if you are facing a cash crisis, it is better to fill SBA Disaster loan and apply for a grant with it. You can apply for a $10000 grant while applying for an SBA loan. Read further for more info.
The grant is not infinite and depends on fund available with SBA.
What is the deadline ( last date) for filling loan application?
The deadline for filling the SBA loan for Covid-19 is December 31, 2021. There is grace period available if you have valid reason. However, it is wise to apply for loan as soon as possible.
How to fill the SBA Disaster Loan Application ?
You can fill your disaster loan application online or contact local SBA center.
Follow this link to apply for loan.
Before jumping to application section, lets understand process of the covid 19 Loan.
Covid 19 SBA Disaster Loan process:
- You apply for loan online with relevant information.
- The SBA review your application and if required, ask for additional information.
- Your loan gets approved or rejected.
- If the loan is approved, you have option to accept or decline the loan. Yes, you can decline the loan if you have no requirement later.
- If you accept the loan, you will get money within 5 days of signing.
- Your loan repayment starts after 11 months.
Loan Application Section Wise Overview :
The application is divided in four sections. Lets understand each section one by one.
Section 1 Disclosure:
You get option to choose your business type in this section. You should be small business as per SBA guidelines.
You should be eligible to tick all the criteria which determines your eligibility for loan application. You should not be in gambling, lobbying, illegal or sexual activities. Read all criteria carefully.
Section 2 Business information:
This section covers business information and financial figures of past 1 year.
You are required to fill following basic information about your business:
- Business name
- EIN or SSN number
- Business legal entity
- Are you non profit or not?
- Are your business franchise or not?
- Full address
- Date of Business establishment
- Stack in the business
- Number of employees
This section covers your past year’s financial information. Please note that past year means year ending on 31 January 2020. So the period is 1 Feb,2019 to 31 Jan, 2020.
So question is how to fill the data here. Before filling these details, please make sure that your books are correctly done up to Jan 2020.
Now, you need to have your profit and loss account with you to fill these figures. If you don’t have, you do calculation yourself or ask your bookkeeper for do for you. If you need any help with catching up on bookkeeping, please contact us to get help from our bookkeeping team.
Gross Revenues for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020) :
This one will be your first figure in profit and loss account. If you have no books done, calculate gross revenue by adding all the money you received as sale of goods or sale of service.
Cost of Goods Sold for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020) :
Cost of goods is the direct cost you incurred for sale of goods. It does not include administrative or other indirect expense. Let me make it more simple with formula below.
Cost of Good Sold =
Purchase made during year
Add Opening inventory at the beginning of the year (1 st Feb,2019)
Less Closing inventory at the end of the year. (31 Jan, 2020)
Cost of Service :
If you have service business, things will be easy. Cost of Service will be expense you have done for the provision of service.
Non-Profit Cost of Operation for the Twelve(12) Month Prior to the Date of the Disaster (January 31, 2020):
If you are non profit, you are required to show cost to run non profit organisation. Please note you should exclude expense which are not part of non profit activities.
Secular Social Services :
If you are secular social service provider, you are required to include annual expense and name of the services.
Compensation from other sources:
In this column, you are required to mention compensation you received from other sources as relief due to disaster.
Section 3 : Business owner Information
This section is the easiest one. Here you are required to give information of following :
- Social security number
- Date of Birth
- Place of Birth
- Residential status
Section 4 : Additional Information
This is the additional information requirement for background check. First three questions confirm your criminal record. It is not necessary that you will become disqualified due to criminal record. But giving right information is vital.
You are also asked to give information of person you hired for filling the form. In case, you hire someone.
Last, you have the option to tick the box “I would like to be considered for an advance of up to $10,000.” This is the grant you may receive if you are eligible.
Other FAQ on SBA Disaster Loan Application :
How long does it take to get approved for the Loan?
There is no specific time estimate for it. SBA has made 50 states eligible and it is certainly getting lots of application. You need to have your all documents ready in advance for fast loan approval.
What if my application gets rejected?
In case your application gets rejected, you can apply again with revised information within 6 months.
Contact Number for SBA:
You can contact SBA department directly for any other query or confusion using below contact details.
Email firstname.lastname@example.org, or
Phone (716) 843-4100.
Due to partial and full lock down at various places, economist are predicting recession. With better planning and proactive steps, you can save your business and survive this tough time. We pray to god for well being of all and end of this pandemic. Till then, stay home stay safe.
Reference : https://www.sba.gov