Coronavirus in Oklahoma: Disaster loans now available through SBA

Mar. 26--As of March 20, the U.S. Small Business Administration has approved an Economic Injury Disaster Loan Declaration for all of Oklahoma's 77 counties. What does that mean?

If your small business or private nonprofit has been negatively impacted due to COVID-19, you may now apply for an SBA Economic Injury Disaster Loan to help alleviate the economic injury suffered by your small business or private nonprofit.

What is an SBA Economic Injury Disaster Loan, and who qualifies?

It is a long-term low interest loan offered by the SBA to assist small businesses and private nonprofits that have suffered substantial economic injury as a result of a declared disaster (in this case, COVID-19). Substantial economic injury means the business is unable to meet its obligations and to pay ordinary and necessary operating expenses. Most private nonprofit organizations and small businesses, as determined by the SBA size standard corresponding to the business' NAICS code, will qualify.

What are the terms of an Economic Injury Disaster Loan, and what amount is available?

The interest rate is 3.75% for small businesses and 2.75% for private nonprofits. The repayment term will be determined on a case-by-case basis and can be up to a maximum of 30 years. In most cases one-half of the prior year's gross profit, up to $500,000, will be available to help your business overcome the temporary loss of revenue. If more than $500,000 is needed, certain businesses may qualify for up to $2,000,000 in assistance.

How can small businesses use the loan proceeds?

Loan proceeds are available for working capital needs related to business operations. This includes fixed debt payments, payroll, accounts payable and other bills that cannot be paid because of the impact of COVID-19. Borrowers should maintain receipts tracking the use of loan proceeds for three years in case of an audit.

What is the application process?

The loan application process is being handled virtually through the SBA website (sba.gov/disaster). In connection with the application (SBA Form 5), the SBA will run a credit check and will require certain additional information to be submitted. The SBA has not said what minimum score is required to qualify, but it is anticipated that most businesses will qualify. Historically, loans have been processed as quickly as three days with funds available within 30 days as a single lump sum deposit.

What are the next steps?

Visit the SBA website (sba.gov/disaster) to review the application and additional information including the SBA Size Standard Table and a list of required submissions. In addition to the SBA, the Oklahoma Department of Commerce has staff available to provide assistance. If additional assistance is required, contact your local legal, banking and/or accounting professionals.

Paula Burkes, Business writer

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