Small businesses urged to apply for disaster loans

Apr. 3--State Rep. Matt Meredith, D-Tahlequah, sat down with representatives of Bank of Cherokee County Thursday, April 2, for a Facebook Live video to discuss ways small businesses can survive the COVID-19 outbreak.

BCC Executive Vice President Susannah Scott said now is the time for business owners to be proactive with lenders and bankers, to take advantage of programs that can help them keep their heads above water.

"Right now is the time to call your banker," she said. "If you have their cell phone number, give them a call or call the front desk."

There are two programs that small businesses who have closed down might want to use. The Small Business Administration offers an Economic Injury Disaster Loan (EIDL), and after the $2 trillion coronavirus relief package was signed last week, $350 billion was set aside for loan program called the Paycheck Protection Program (PPP).

"They're two totally different programs," said Terry Lockhart, BCC executive vice president and chief lending officer. "Each individual business can apply for one of those. You're eligible for one and that's it."

People can apply for an EIDL at sba.gov/disaster. The EIDL can help businesses tackle financial obligations that could have been met had a disaster not occurred. To be eligible, businesses must have sustained an economic injury and be located in a disaster-declared or contiguous county.

"If your loan request is over $25,000, that loan will be secured and will be executed just like a normal SBA loan," said Lockhart. "It has up to 30-year terms. It has 3.75 percent interest. So it has some really discounted things like that, but it is an actual loan and it is not ... forgivable."

According to Lockhart, the PPP loan should be available Friday, April 3. Small businesses with fewer than 500 employees on or before Feb. 15, 2020, are eligible for the loan. Businesses can receive up to $10 million. However, the amount a business owner receives is based on average monthly payroll costs. Businesses can qualify for 2.5 times their monthly payroll average.

"So for example, if you have a $10,000 a month payroll average, you could be eligible for up to $25,000," said Lockhart. "Of that $25,000, you will have eight weeks to use that $25,000 worth of funds. If you use the funds to pay your rent, pay your utilities, pay a mortgage, or any of your payroll expense, then that is forgiven. So basically, if you use it for those four things -- and 75 percent of it has to be used specifically for payroll -- then that is eligible to be forgiven."

Whatever funds from a PPP loan are not used within the eight weeks, or cannot be proved to have been used for the four categories, will be have to paid back. So if someone uses $20,000 of a $25,000 loan, they will then have a $5,000 loan.

"That turns into a two-year term," said Lockhart. "The interest rate is extremely low. It's anywhere from half a percent to 1 percent."

People are encouraged to call their bankers and local lenders to see if they are eligible for either program. Many are planning to take advantage of the program, so banks are asking that customers be patient during this busy time.

Scott also mentioned the Cherokee Nation Small Business Assistance Center has an emergency loan program.

"It is for businesses that have two years of tax returns, and all you have to do is be a member of a federally recognized tribe," said Scott. "You do not have to be a Cherokee Nation citizen, and this has to be within the 14-county Cherokee Nation jurisdiction."

Check it out

For more info on the CN Small Business Assistance Center's loan program, email sbac@cherokee.org. More information about loan programs from the Small Business Administration can be found at www.sba.gov.

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