Stay Informed: How Small Businesses Can Apply for Loans

Small Business Administration Economic Injury Disaster Loans

As of Saturday, March 21, 2020, small business owners statewide in the Commonwealth of Kentucky are eligible to apply for a low-interest loan from the Small Business Administration (“SBA”) to combat economic losses attributable to the Covid-19 pandemic. The loans, termed Economic Injury Disaster Loans by the SBA, are intended to provide working capital to small businesses suffering substantial economic injury as a result of Covid-19. Such economic losses are seemingly inevitable in Kentucky, where bars and restaurants were closed to in-person business as of March 16 and all non-essential businesses were ordered closed March 23. The loans may be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid because of the disaster’s impact. The loans offer up to $2 million in assistance and can provide critical economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. The interest rate is 3.75% for small businesses and 2.75% for non-profits. Payment terms are flexible in order to keep payments affordable, with a maximum term of 30 years. Terms are determined on a case-by-case basis. Though administered by the SBA, a business of any size may apply for the loan.

The SBA encourages applicants to apply online. If you do not have internet access, contact the SBA at 1-800-659-2955.

The SBA Economic Injury Disaster Loan application is a three-step process. First, a business or non-profit submits its application for a loan of up to $2 million. A complete application includes a Business Loan Application (SBA Form 5) and other required documents, including the IRS Form 4506, complete copies of the business’s most recent Federal income tax returns, a personal financial statement (SBA Form 413), and a schedule of liabilities.

Second, the SBA will review your business’s credit before conducting an inspection and estimating losses. The SBA’s internal goal is to reach a decision on your loan application within two to three weeks. Third, the loan will close and funds will issue. The SBA prepares and delivers loan closing documents. Once executed, an initial disbursement will be made within five days.