disaster loan assistance canton ohioDo you have questions or concerns right now in regards to the SBA Business Disaster Loan Program? Call me on (330) 244-8880 .

For Corona Virus related disaster loans you will be applying under the Economic Injury Disaster Loans Section.

 

Borrowers may apply for different SBA loans – PPP loans, EIDL loans, non-disaster SBA 7(a), 504 and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). If you accept the EIDL loan, and you subsequently qualify for the PPP loan, you can re-finance the EIDL loan with the PPP loan.

Fact Sheet for Businesses of All Sizes

Realtors ARE businesses. 

Landlords may be eligible if they have a loss of rents. 

If your business or private, nonprofit organization has suffered physical damage or your small business or private, nonprofit organization of any size has sustained economic injury after a disaster, you may be eligible for financial assistance from the U.S. Small Business Administration. If your business—regardless of size—is located in the declared disaster area, you may apply for a long-term, low-interest loan to repair or replace damaged property.

Even if your property was not damaged and you are a small business owner or a private, nonprofit organization, you may apply for a working capital loan from the SBA to relieve the economic injury caused by the disaster.

Physical Disaster Loans
Businesses of all sizes and private, nonprofit organizations may apply for a Physical Disaster Loan of up to $2 million to repair or replace damaged real estate, equipment, inventory and fixtures. The loan may be increased by as much as 20 percent of the total amount of physical loss, as verified by SBA, to protect the property against future disasters of the same type. These loans will cover uninsured or under-insured losses.

Economic Injury Disaster Loans
Small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations of all sizes suffering substantial economic injury may be eligible for an Economic Injury Disaster Loan of up to $2 million to meet necessary financial obligations – expenses the business would have paid if the disaster had not occurred.

Interest Rates
The interest rate on both these loans will not exceed 4 percent if you do not have credit available elsewhere. Repayment can be up to 30 years, depending on the business’s ability to repay the loan. For businesses and nonprofit organizations with credit available elsewhere, the interest rate will not exceed 8 percent. SBA determines whether the applicant has credit available elsewhere.

Application Information
Businesses may apply directly to the SBA for possible assistance. The SBA will send an inspector to estimate the cost of your damage once you have completed and returned your loan application.

SBA now offers you the option of filing your business disaster loan application electronically. Downloadable application forms are available at: Apply for Assistance.

For additional information, please contact our Customer Service Center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov.

Frequently Asked Questions
What information must I submit for a disaster loan?
Submit a completed loan application and a signed and dated IRS Form 4506-T giving permission for the IRS to provide the SBA your tax return information.

To process your application we need current financial information such as a personal financial statement, a current profit-and-loss statement, balance sheet and a list of debts.

Can I use the disaster loan to expand my local akron canton business?
The disaster loan helps restore property to pre-disaster condition, and, under certain circumstances, protects the structure from future disasters. It cannot upgrade or expand a business unless required by local building codes.

I already have a mortgage on my business. Can the SBA refinance my mortgage?
The SBA can refinance all or part of a previous mortgage in some cases when the applicant does not have credit available elsewhere, has suffered uninsured damage (40 percent or more of the property value), and intends to repair the damage. SBA disaster loan officers can provide additional details.

How soon before I know I’ve been approved for a loan?
The sooner you return the completed loan application, the sooner the SBA can process it. The SBA tries to make a decision within two to three weeks. Make sure the application is complete. Missing information is a major cause of delays.

Is collateral required for these loans?
Physical business loans over $25,000 and EIDL loans over $25,000 must be secured to the extent possible.

Should I wait for my insurance settlement before I file my loan application?
No. Don’t miss the filing deadline by waiting for an insurance settlement. Final insurance information can be added when a settlement is made. The SBA can approve a loan for the total replacement cost, but any insurance proceeds that duplicate SBA’s loan must be applied to your SBA loan.

How may I use an Economic Injury Disaster Loan?
The loan provides working capital for disaster-related needs until your business or private, non-profit organization recovers. You may request an EIDL for the amount of economic injury but not in excess of what your business or private, non-profit organization could have paid if the disaster had not occurred. EIDL loans cannot refinance longterm debts or provide working capital needed before the disaster. EIDL loans do not replace sales or lost profits.

Must I submit a personal financial statement with my loan application?
Yes. The SBA must review a financial statement for each owner and one for each partner, officer, director and stockholder with 20 percent or more ownership. The SBA requires the principals of the business to personally guarantee repayment of the loan, and in some instances to secure the loan by pledging additional collateral.

Plan to Stay in Business
Continuity planning assures your business will function as soon as possible after a natural or man-made disaster.

Review Insurance Coverage
Inadequate insurance coverage can lead to major financial loss if your business is damaged, destroyed or simply interrupted. Store records your insurance provider will want to see after an emergency in a safe place.

Prepare for Utility Disruptions
Examine which utilities are vital to your business’s day-to-day operation. Identify back-up options such as portable generators to power the vital aspects of your business in an emergency.

Secure Facilities, Buildings and Plants
Identify what production machinery, computers, custom parts or other essential equipment is needed to keep your business open. Plan how to replace or repair vital equipment. Store extra supplies for use in an emergency. Plan what you will do if your building, plant or store is not usable.

Back-up Financial Records
Back-up financial records and other vital information stored on computer hard drives. Files should be stored in a portable lockbox office, at least 500 miles away.

The Three-Step Process: Disaster Loans
The Three-Step Process: Disaster Loans (en Espanol)

The table below compares the terms of the EIDL and PPP loans:

EIDL PPP
Who is the lender?
The SBA A Bank that is already an SBA lender or any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
When can I apply?
Now
  • April 3, 2020 for small businesses and sole proprietorships
  • April 10, 2020 for independent contractors and self-employed individuals
  • Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
Who can apply?
  • A business with not more than 500 employees
  • An individual who operates under a sole proprietorship, with or without employees, or as an independent contractor
  • A cooperative with not more than 500 employees.
  • A tribal small business concern, as described in 15 U.S.C. 657a(b)(2)(C), with not more than 500 employees.
  • A business, including an agricultural cooperative, aquaculture enterprise, nursery, or producer cooperative, that is small under SBA Size Standards found at https://www.sba.gov/size-standards
  • Businesses and entities that were in operation on February 15, 2020.
  • Small businesses, 501(c)(3) nonprofit organizations, 501(c)(19) veterans organization, or Tribal businesses that have fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher
  • Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals
  • Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72 (Hotels and Restaurants), for which the affiliation rules are waived
  • Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company
What are the affiliation rules?
Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses
What is the maximum amount of the loan?
The maximum loan size is $2 million. Applicants who apply for this loan may request an advance of up to $10,000 from the SBA. The advance will be distributed within 3 days. Applicants are not required to repay this advance. The maximum loan size is $10 million. The calculation is as follows:

  • If you were in business February 15, 2019 – June 30, 2019, the max loan is equal to 2.5x the average monthly payroll costs of the 12 months prior to your application. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date
  • If you were not in business between February 15, 2019 – June 30, 2019, the max loan is equal to 2.5x the average monthly payroll costs between January 1, 2020 and February 29, 2020
  • If you took out an EIDL between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.

Payroll includes:

  • Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
  • Payment for vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Group health care benefits, including insurance premiums
  • Retirement benefits
  • State or local tax assessed on the compensation of employees

Payroll excludes:

  • Employee/owner compensation in excess of $100,000
  • Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
  • Compensation of employees whose principal place of residence is outside of the U.S.
  • Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act
What is the annual interest rate?
3.75% for businesses, 2.75% for non-profits 1%
What is the term of the loan?
Up to 30 years 2 years
When is the first loan payment due?
One year after the loan origination date (interest is accrued during the deferment) At least six months after the loan origination date (interest is accrued during the deferment)
What can we use the loan for?
Financial obligations and operating expenses that could have been met had the disaster not occurred Permitted costs which are:

  • Employee salaries, commissions, or similar compensations (see exclusions above)
  • Health insurance premiums and costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave
  • Payments of interest on any mortgage obligation but excluding any prepayments or payments of principal
  • Rent (including rent under a lease agreement)
  • Utilities
  • Interest on any other debt obligations that were incurred before the Covered Period (as defined below)
Is there a loan forgiveness program?
No Yes – calculated as the amount spent on Permitted costs by the borrower during an 8-week period (the “Covered Period”) after the origination date of the loan
What reduces the forgiveness?
N/A The amount forgiven is reduced based on failure to maintain the average number of full-time equivalent employees versus the period from either February 15, 2019, through June 30, 2019, or January 1, 2020, through February 29, 2020, as selected by the borrower. The amount forgiven is also reduced to the extent that compensation for any individual making less than $100,000 per year is reduced by more than 25% measured against the most recent full quarter. Reductions in the number of employees or compensation occurring between February 15, 2020, and 30 days after enactment of the CARES Act will generally be ignored to the extent that reductions are reversed by June 30, 2020. Forgiven amounts will not constitute cancellation of indebtedness income for federal tax purposes.
How do I get forgiveness?
N/A You must apply through your lender for forgiveness on your loan. In this application, you must include:

  • Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings
  • Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities
  • Certification from an officer of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.
What collateral is required?
The SBA will place a UCC lien against the assets of the business No collateral is required from either the business or its owners
Is a personal guarantee required?
Yes, for loans > $200,000, owners of > 20% of the business, managing members of LLCs, managing partners of LPs. However, no liens will be taken against real estate owned by the guarantor No.
Do I need to have filed my 2019 Taxes to apply?
No, 2019 Taxes do not have to be filed prior to applying for the loan. However, businesses will be asked to submit IRS form 4506T, which provides the SBA with access to historical tax returns Will depend on the lender

Note – This information is supplied to inform our clients and partners.  However, the exact terms of loans are determined solely by the lender(s) and we can make no representation as to the accuracy or completeness of any information contained herein.

If you need assistance applying for the Economic Injury Disaster Loan Assistance (EIDL) program or Paycheck Protection Program (PPP), please contact us – (330) 244-8880

Sources:
https://disasterloan.sba.gov/
https://www.congress.gov/

Here is the main SBA Disaster Assistance Website: https://disasterloan.sba.gov/ela/

Questions? Concerns? Call me on (330) 244-8880.

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