- Loan amounts will be up to $2.0 million for a business applicant and all its affiliates
- They will use credit scores in their decisions for approval
- Rates for businesses will be 3.75% fixed for 30 years
- All loans will have a repayment term of 30 years – payments can be deferred for the first 12 months
- In a Phase I application (which will be most businesses) the maximum loan amount will be 50% of their gross profit from their last completed year. In other words off last year’s tax returns… Sales – Cost of Goods Sold = Gross Profit x 50% = Maximum Loan Amount
- Larger businesses can proceed to a Phase II application that will require additional documentation if they need more than $500,000
- Loans will be collateralized if over $25,000 if collateral is available with real estate being the preferred collateral
- All 20% or more owners will fully personally guaranty the loan. Changing ownership prior to application to lower an individual’s ownership to avoid a personal guaranty could jeopardize eligibility
- Proceeds may be used for working capital for business expenses only including supplies and materials, payroll, debt payments, utility, and other operational costs. Essentially any expense that appeared in the business expenses in their financials in the past 12 months is likely eligible — anything else such as expanding or renovating a facility or making capital equipment purchases (vehicles or other equipment) is not
- No debt consolidation will be allowed. The exception would be temporary or interim loans that were taken out since the crisis started for operational expenses may be refinanced – the business can pay regular monthly debt payments as they become due
- Non-profits can apply but not churches, agriculture production, gambling, or sin businesses
- Timeline is expected to take less than a week for approval using the scoring system after a business applies directly online (they will use tax return transcripts as well to verify applications). Targeting 30 days to close
- They expect 300,000 to 500,000 applications depending on the length of the Corona Virus Crisis and encourage patience
- Businesses will be required to retain receipts and evidence of what they spent the proceeds on for a period of 3 years and may be subject to SBA Audit to ensure only eligible business expenses were paid
- Everyone is encouraged to Apply Directly with the SBA at DisasterLoan.sba.gov/ela (Be aware with peak times the site may be difficult loading. If this happens check back at off-peak times.
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