It goes without saying that the goal is to prevent the spread and limit the impact of COVID-19 as much as possible. With that in mind, many businesses have had to alter their daily operations. Whether transitioning to remote work for the time being or closing brick and mortar businesses, the impact COVID-19 is having on local businesses is significant. To provide relief to businesses affected by the coronavirus, the U.S. Small Business Administration (SBA) rolled out a disaster assistance loan. Additional relief options have been made available by DEED and the City of Fergus Falls.
About the SBA Economic Injury Disaster Loan (Federal)
The Economic Injury Disaster Loan (EIDL) provides working capital to small businesses, which are defined by the SBA according to industry, revenue, and the number of employees on the payroll. Greater Fergus Falls believes many local businesses and nonprofits are eligible for an Economic Injury Disaster Loan.
The MN Department of Employment and Economic Development finalized Minnesota’s eligibility to access Economic Injury Disaster Loan funding on March 20th. Technical Assistance with this application is free, provided by the West Central Small Business Development Center. Sign up for assistance here, submit application clarification questions to email@example.com, or call 218-299-3037 for further assistance.
Submitting an Application for an Economic Injury Disaster Loan
If your business meets the definition of a small business, as dictated by the SBA, and you have contacted your banker, you can apply for the disaster assistance loan by submitting an application with the SBA. There is no cost to apply. The application can take up to 21 days to be processed and another 3-5 business days for legal approval.
Funding will be available up to two million dollars. The SBA will assess accounts payable, quarterly taxes, and other business expenses for the last three years to determine the size of the loan. The goal is to provide enough funds for the business to sustain itself, and the loan cannot be used for profit, expansion, or paying off debt. However, the loan can be used to pay fixed debts, payroll, accounts payable, and other bills that are affected by a temporary loss of revenue.
The SBA hopes to make repaying the loan as affordable as possible. For that reason, the terms of the loan can be up to 30 years and will be determined on a case-by-case basis. In addition, the interest rate will be dependent on the type of organization requesting the loan. Nonprofits will receive an interest rate of 2.75%, while businesses will be granted an interest rate of 3.75%. If your business is approved for the loan, you have the option to accept or decline it within six months of approval.
Visit the Small Business Association website to learn more about the Economic Injury Disaster Loan.