In this timely and helpful webinar, Tim talks with Edward Haddock, the district director for the US Small Business Administration for Arkansas. The SBA is a federal agency and in these unprecedented times with COVID-19, Edward provides needed information about the disaster lending program for small businesses across the country.
The declared state of emergency has granted the SBA the authority to do disaster lending. This loan program is available throughout all 50 states as well as the US territories. In our current situation, the SBA is bypassing the bank and accepting applications directly. In this webinar, you’ll learn more about these loans, what is required, and how to apply. If you think you might not be eligible, don’t rule yourself out so quickly! Edward discusses criteria, but also encourages you to apply and let the SBA make a decision on your eligibility, since things are changing so rapidly.
What are the loans? They are economic injury disaster loans to help small businesses manage liquidity needs. While the loans aren’t intended to replace lost sales, they can be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans don’t apply to agricultural enterprises, religious organizations, charitable organizations, gambling concerns, casinos and racetracks.
To determine if you qualify, the SBA will assess your credit history, your ability to repay the loan, and general eligibility. The interest rate is 3.75% for small businesses and 2.75% for nonprofit organizations with terms up to 30 years.
There is no cost to apply and you can find the information you need and apply easily on SBA’s website or download a printable application. Make sure your application is complete and submit as soon as possible! In the last half of the webinar, Edward answers listeners’ questions.
- Are self-directed IRAs considered affiliates?
Edward encourages listeners to go ahead and apply for the loan, addressing such concerns in the comment section. Your loan officer will follow up with you.
- If you have an existing SBA 7A loan in place, can you still qualify for this disaster loan?
- What types of real estate investing businesses will be considered as an approved type of business for the loan?
Everything including individuals with single family rentals or commercial real estate, commercial rentals, apartments, etc.
- Is there a program that can be used to refinance loans?
Not currently. The 504 loan can be used for that, but there is nothing under the relief act funding.
- How is it determined if a business suffered a loss through the COVID 19 versus just a slowdown in business?
Apply for the loan even if you think it’s just a slowdown. What the SBA will look for is to provide liquidity.
- Can a brand new business with no tax return still apply?
Yes! The SBA will look at your liability statement. On your application, provide the information you do have and leave a comment in the comment section to indicate what you’ve been paying since your business has been in operation.
- How can someone get assistance if their area has not been designated a disaster area?
All of the US plus US territories are all covered with this loan.
- What percentage of applications will be approved?
Edward can’t predict this but estimates 80% approval from what he has seen so far. The administration is making an effort to maximize the impact of the SBA lending program.
- Does the SBA need all principals financials?
They are using personal financial statements. There might be provisions in the coming Care Act that wipe this out, but currently they are looking for some type of personal guarantee.
- If your liability statement on your application is incomplete, should you wait to be contacted or submit a new application?
If you have a loan processing number, go back and submit your forms using that. You can call or email and ask for the case manager, not the loan officer.
- If you own two businesses, can both be eligible? Is it okay if they’re part of the same tax return filing?
Yes and yes! You can submit one as an affiliate of the other. Indicate all of this in the comment section of your application.
- How can you keep up with the changing programs?
Sign up for local Arkansas updates at www.sba.gov/ar or for national updates at www.sba.gov/updates. It’s also a good idea to find your local district office and sign up for their updates.
- What is the timeline for loan approval?
They are trying to get approvals out in two weeks.
- If you assumed another borrowers’ loan and the loan is on your tax returns, but not on your credit, can you still list it?
Yes. List all liabilities and give as much information as possible on your application.
- What is the start date of the loan relief packaging?
At the date of this webinar it’s not finalized, but possibly February 19.
- Other than the SBA, what are good resources for small business owners?
Opportunity zones are still greats opportunities. You can also check with the local chamber of commerce for local programs.
Local Arkansas updates: www.sba.gov/ar
National updates: www.sba.gov/updates
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