SBA Disaster Loans – Eligibility and Filing Requirements
Posted on 03/24/2020 at 04:30 PM by Jeffrey Baxter
SBA Disaster Loans are currently available to small businesses in Iowa, and small businesses have been applying for those loans since Saturday, March 21. The current expected wait for applicants is 3 weeks, with an additional week for funds to be deposited. It is imperative that businesses get their application filed as soon as possible to get those funds in their hands so they can get their bills paid and payroll obligations met. Even if businesses are not sure whether they will want to take out the full amount of loans available to them, they should still apply as soon as possible. Applicants will not be required to take out any or all of the amounts offered. Businesses should get their applications filed, and once they know what amounts are being offered, they can make the determination whether to take out some or all of those funds at that time.
The SBA Disaster Loans will be set for repayment terms of 30 years – and can be repaid early. Interest on these loans will be at 3.75% for small businesses and 2.75% for private non-profits. Eligibility requirements are based on a business’s NAICS code. The requirement will be based either on sales or on number of employees, depending on the NAICS code for the business. In most cases it is 500 employees or $8 million in sales. The SBA website has a list of NAISC codes available for search.
The documentation required in filing the application for the SBA Disaster Loan includes a financial statement for the Business, and for each owner of 20% or more. The SBA is waiving the requirement of providing tax returns as part of the application. They may request them later, but at application they will not be required. A report detailing the liabilities of the business is required. The SBA has forms for applicants to use – or if the applicant has these forms available, they can submit their own forms.
The SBA Disaster Loans are available for up to $2 million. How the SBA determines the loan amount is through a review of the regular expenses of the business, and factor that by a 6 month term. Basically the SBA assumes that this financial impact will have a six month period. They will review the Application, and determine the monthly expenses of the business, and the loan amount will be approximately 6 mo. of a business’s expenses. For example, if it is determined that a business’s expenses are $20,000 per month, the SBA loan amount would be approximately $120,000. In the event the amount awarded is insufficient, and there are special circumstances for a business, an applicant can request an increase in their loan amount, and present evidence of the need, and the SBA will consider the request.
If there are any questions regarding the SBA Disaster Loans, the application process, or a business’s eligibility please contact our office to assist you with these loans, and one of attorneys will be happy to assist you.
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