How To Apply For SBA Coronavirus Disaster Loans

The US Small Business Administration (SBA) has announced that businesses in all states and territories are eligible for Coronavirus Disaster Loan Assistance from the Federal Government. For comic book retailers and other comics industry businesses suffering interruptions because of the crisis, these low-interest loans are the first wave of financial relief. With changes made by the Senate CARES Act, sole proprietors with and without employees and independent contractors are also eligible for these loans – a potential source of good news for creative professionals and small publishers.

Here are some basics:

• Loans are available for up to $2 million.
• Interest rate: 3.75%
• Payments are deferred for the first year. The loan does accrue interest during this period.
• Long-term loans are available, up to 30 years. Specific terms will be based on your situation.
• The loans can be secured by physical inventory.
• If you have other credit available, you may not be eligible for this relief.

1. Apply for loan here: https://disasterloan.sba.gov/ela/ Due to high traffic, the SBA is recommending that you apply online at non-peak hours, from 7 pm to 7 am EDT.
2. Property is verified and a loan processing decision is made
3. Loan closed and funds dispersed

Here is an SBA document outlining the complete 3-step process: View PDF

The SBA indicates that loan decisions are typically made within 2 to 3 weeks, but because of the current extent of the COVID-19 situation, it may take longer for them to deal with the amount of disaster loan applications.

If your loan is approved they will send you Loan Closing Documents. Once those are submitted an initial disbursement of disaster loan funds will be made within five days.

New Provisions Under the CARES Act

Congress’ omnibus Coronavirus Aid, Relief, & Economic Security Act (CARES Act) passed by the Senate includes provisions that expand the SBA disaster loan benefits. The bill still needs to pass the House and get signed into law by the President. In addition to groups already covered, the Act expands eligibility to include:

• A business with 500 or fewer employees
• Sole proprietorships, with or without employees
• Independent contractors
• Cooperatives with 500 or fewer employees
• ESOPs with 500 or fewer employees
• Tribal small business concerns

(From Steptoe) The CARES Act makes the following additional changes to the SBA Disaster Loan program during the covered period for loans made in response to COVID-19:

• Waives rules related to personal guarantees on advances and loans of $200,000 or less for all applicants;
• Waives the “1 year in business prior to the disaster” requirement (except the business must have been in operation on January 31, 2020);
• Waives the requirement that an applicant be unable to find credit elsewhere; and
• Allows lenders to approve applicants based solely on credit scores (no tax return submission required) or “alternative appropriate methods to determine an applicant’s ability to repay.”

Entities applying for loans under the Disaster Loan Program in response to COVID-19 may, during the covered period, request an emergency advance from the Administrator of up to $10,000, which does not have to be repaid, even if the loan application is later denied. The Administrator is charged with verifying an applicant’s eligibility by accepting a “self-certification.” Advances are to be awarded within three days of an application.

Advances may be used for purposes already authorized under the SBA Disaster Loan Program, including:

• Providing sick leave to employees unable to work due to direct effect of COVID-19;
• Maintaining payroll during business disruptions during slow-downs;
• Meeting increased supply chain costs;
• Making rent or mortgage payments; and
• Repaying debts that cannot be paid due to lost revenue.

Documents You’ll Need

(From Business Washington) FOR ALL APPLICATIONS THE FOLLOWING ITEMS MUST BE SUBMITTED. For your convenience, we have links to several of these documents so you can have the information gathered prior to going to the loan portal.

• Loan application (SBA Form 5), completed and signed (this is electronic/online in the portal) but is included here so you can see what information is asked prior to going to the portal.
• Tax Information Authorization (IRS Form 4506-T), completed and signed by each applicant, each principal owning 20 percent or more of the applicant business, each general partner or managing member; and, for any owner who has more than 50 percent ownership in an affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management – Also attached here.
• Complete copies, including all schedules, of the most recently filed Federal income tax returns for the applicant business; an explanation if not available
• Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member
• Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used)

For more information on the SBA Coronavirus Disaster Loans, visit: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources