Working Remotely – Survival Tactics
Like many, over the past two weeks I have learned that I can be just as productive from my home office. It just takes a little planning. The following are some tips to make it easier to get your busin...
In response to the Coronavirus (COVID-19) outbreak and economic shutdown the Small Business Administration (SBA) is now offering low-interest federal disaster working capital loans through the Economic Injury Disaster Loan Program (EIDLP) for small business and private non-profit businesses in Pennsylvania.
An Economic Injury Disaster Loan provides money for businesses to pay fixed debts, payroll, accounts payable and other liabilities and provide working capital during a disaster. The amount of each loan is specific to the “economic injury” of the business and is capped at $2,000,000. The cap can be waived by the SBA if the business is a major source of employment. The SBA defines “economic injury” occurring when a business is unable to meet its obligations and to pay its ordinary and necessary operating expenses. The loan cannot be used to fund business expansion or to refinance existing debt. While the application is made now, it will cover losses going back to January 31st. Before applying for a loan review the current business insurance policies, other assistance programs, existing loans and existing liens on assets to determine if an Economic Injury Disaster Loan would be an “event of default” that would violate any covenants in existing loan documents or existing financing agreements.
Any and all small business, small agricultural cooperative and private non-profit, with its principal office located in the Commonwealth of Pennsylvania that has been impacted by COVID-19 is eligible for assistance under the EIDLP. The business must be deemed by the SBA to be creditworthy and have the ability to repay the loan.
The EIDLP interest rate is 3.75% for a small business and 2.75% for a private non-profit. Repayment terms are determined on a case by case basis with a maximum repayment period being 30 years. If the loan exceeds $25,000.00 it will need to be secured with collateral and if the business does not have collateral it will have to be prepared to pledge assets of the business owner as collateral.
Applications can be made at www.disasterloan.sba.gov. The SBA encourages applications to be made online. Upon submission, an SBA Loan Officer is assigned to review the application and will contact the applicant to discuss any loan recommendation. The SBA will subsequently send the loan determination to you in writing. The application takes approximately 8 to 21 days to process. If approved the SBA will prepare and send the applicant the Loan Closing Documents for signature. Once signed and returned to the SBA, it will take approximately 5 more days for the SBA to release the loan funds. A business may apply again if it is later determined that more money is needed.
You will need the following:
You may also need:
If you have suffered an economic loss due to the Coronavirus (COVID-19) there may be help available. Make sure before applying that you will not be violating any existing loan or economic relief terms and then apply as soon as possible as it will take almost a month to receive the funds.
Penglase & Benson, Inc. is committed to helping small businesses in the Philadelphia area including Bucks County, Montgomery County and Chester County. Contact Penglase & Benson, Inc. at (215) 348-4416 or John Benson, Esquire at [email protected] if you have any questions regarding the SBA loan process or are in need of assistance to help your business survive and grow.