Top 10 small business loan questions regarding coronavirus
Loretta Byrd, executive director of the Benson Area Chamber of Commerce
From Benson Area Chamber of Commerce
A lot of questions about the small business loans available to businesses struggling during the coronavirus outbreak have surfaced. Here, the U.S. Chamber of Commerce answers the most common questions:
1. What loans are available to help small businesses during Coronavirus?
Apply for the Economic Injury Disaster Loan directly from the SBA here.
Paycheck Protection Loans are government-backed but will come from private banks. You should inquire at your local bank about these loans. The Treasury Department has just released the loan application. You can see it here. You will still need to apply for the loan at your local bank. This is just the application.
3. How much can I borrow?
The Economic Injury Disaster Loan from the SBA can be up to $2 million working capital for up to a 30-year term at 3.75% (2.75% non-profits). Not everyone will qualify for that amount.
The Paycheck Protection Loans can be for 2.5 months of average payroll or $10 million — whichever is less.
4. Do I need to repay these loans?
You must repay the Economic Injury Disaster Loan from the SBA. Payments can be deferred for one year after the origin of the loan.
All or some of the Paycheck Protection Loan may be forgiven (converted into a grant). There are specific requirements about how you spend the loan and if you continue to employ your workers in order for it to be forgiven. Read them here.
5. What about the $10,000 emergency grant I’ve heard about?
The SBA is offering to advance businesses a $10,000 grant that does not need to be paid back. That grant will be paid quickly — in as little as three days.
You can apply for that $10,000 grant as part of the Economic Injury Disaster Loan process. If you are awarded the $10,000 emergency grant, you will not have to pay the grant (just the grant) back. You will still have to repay the rest of your SBA Economic Injury Disaster Loan.
6. Can self-employed workers and freelancers apply?
Paycheck Protection Loans are available to 501(c)(3)s, self-employed, sole proprietors and independent contractors.
SBA Economic Injury Disaster Loans are available to small businesses and non-profits (including faith-based) with fewer than 500 employees, sole proprietors and independent contractors.
7. Can you apply for both loans?
Yes. You can apply for and receive both loans.
8. Do I need good credit to qualify for these loans?
The Paycheck Protection Loan requires no collateral and no personal guarantee.
The Economic Injury Disaster Loans are given based on credit scores. No tax returns are required. You can borrow up to $200,000 without a personal guarantee.
9. What if I’ve already fired or laid off my employees? Do I still qualify for a Paycheck Protection Loan?
Your loan may be forgiven if you bring back employees and restore wages generally within 30 days and maintain them through June 30.
10. My bank doesn’t seem to know anything about the Paycheck Protection Loan. Now what?
Banks are currently working out the details but are expected to be ready by April 3. The Treasury Department has released more details on the loan here. You can also view the application here. You will still need to apply through a private bank. You can find a list of SBA-approved lenders here.