We are sure many of you are aware that yesterday Congress passed a COVID-19 relief bill
which includes funding for the SBA’s Economic Injury Disaster Loan Program. Those funds are
targeted for businesses which have been adversely impacted by the COVID-19 pandemic.
We have been in touch with elected officials and local SBA lenders and wanted to provide our
clients with some more detailed information about the SBA Economic Injury Disaster Loan
program, including who qualifies, loan terms and application requirements.
Locally, the SBA Emergency Loans are available to small businesses and nonprofits operating
in Chester and Delaware County, Pennsylvania (we believe other Pa. counties are included, but
that is not reflected yet on the PA website), the State of Delaware, the Maryland counties that
are immediately contiguous with Delaware and Chester County and Gloucester and Salem
County, New Jersey. Any small business or non-profit which cannot meet its ordinary and
necessary financial obligations due to COVID-19 can apply for a working capital loan.
SBA Emergency Loans cannot be used to refinance existing debt. We will issue a separate
COVID-19 Response Team update on payment deferments for existing SBA Loans, but the
guidance on those deferments is still evolving.
Under the SBA Emergency Loan program, the maximum loan amount available is $2,000,000
(although we expect most loans will be much smaller) and the maximum interest rate for
businesses is 3.75% and 2.75% for non-profits. The loan term can be as long as 30 years. The
amount of the loan is a function of the economic injury incurred and may be affected by other
emergency loans granted by the SBA in our area. The rate and term are based on the financial
condition of each borrower.
Loan approvals are based on credit history and repayment ability. We do not know how
repayment ability will be assessed given the dynamic nature of this situation, but we hope that
the SBA will be flexible when approving loans. The loans will be secured by collateral and a
personal guaranty will be required.
Small businesses which have defaulted on their SBA loans are not be eligible for the SBA
Emergency Loan Program.
You can apply for an SBA Emergency Loan online and by mail. While we strongly encourage
you to apply online, we have attached a link to the application so you can see the type of
information that will be required by the SBA.
When you apply, you will be required to provide your business and personal tax returns,
insurance information and a personal financial statement. You will also be asked if you have
Business Interruption Insurance, so check with your insurance broker to be sure business
interruption coverage is not available before you apply.
You can apply for an SBA Emergency Loan online here: https://disasterloan.sba.gov/ela/
You can apply by mail or see the type of information that you will be asked to provide here: https://disasterloan.sba.gov/ela/Documents/Disaster%20Business%20Loan%20Application%20
If you have questions about the SBA Emergency Loan Program, or would like assistance with
your application, please send an email to [email protected].