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Disaster Assistance: COVID-19 Loans

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With shelter-in-place orders, temporary closures of nonessential businesses, and an indeterminate time frame for a return to normalcy, companies everywhere are feeling the effects of COVID-19. Small businesses suffering substantial economic injury as a result of COVID-19 should explore disaster assistance available through the U.S. Small Business Administration (SBA).

SBA’s Economic Injury Disaster Loans (EIDL) offer up to $2 million in assistance, with long-term repayment options of up to 30 years and an interest rate of 3.75 percent, to help small businesses overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.

Loans are available to small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes. SBA does not specifically define small business, rather, SBA adheres to this size table which follows NAICS codes.  SBA offers an online size standards tool for businesses to quickly determine if they qualify as a small business.

EIDL assistance is available in the California counties of: Alameda, Calaveras, Contra Costa, Los Angeles, Sacramento, San Diego, San Francisco, San Mateo, Sonoma & Tuolumne; and the contiguous California counties of: Alpine, Amador, El Dorado, Imperial, Kern, Lake, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Napa, Orange, Placer, Riverside, San Bernardino, San Joaquin, Santa Clara, Santa Cruz, Solano, Stanislaus, Sutter, Ventura & Yolo.

Standard eligibility requirements for EIDL assistance are outlined below.

  • Credit Requirements:
  • EIDL assistance is available only to small businesses when SBA determines they are unable to obtain credit elsewhere.
  • Credit History – Applicants must have a credit history acceptable to SBA.
  • Repayment – Applicants must show the ability to repay the loan.
  • Collateral – Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
  • Insurance Requirements: To protect each borrower and the Agency, SBA may require you to obtain and maintain appropriate insurance. By law, borrowers whose damaged or collateral property is located in a special flood hazard area must purchase and maintain flood insurance. SBA requires that flood insurance coverage be the lesser of 1) the total of the disaster loan, 2) the insurable value of the property, or 3) the maximum insurance available.

You can read more about the program’s offerings and apply online on SBA’s website. You must submit the completed loan application and a signed and dated IRS Form 4506-T giving permission for the IRS to provide SBA your tax return information.

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Moore Messina Webb LLP.
2237 Douglas Blvd. Suite 140
Roseville, CA 95661

Phone: (916) 784-1040

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