SBA Relaxes Criteria for Small Businesses Seeking Disaster Assistance Loans
The U.S. Small Business Administration has revised its criteria for states or territories seeking disaster assistance loans for small businesses impacted by the coronavirus (COVID-19) pandemic. There are an estimated 30 million small businesses in the United States, according to SBA officials.
“We’re very encouraged that banks and financial institutions are responding to the president’s efforts to mobilize an unprecedented public-private response to the coronavirus (COVID-19) outbreak,” said Jovita Carranza, administrator at the SBA. “As a result, most small businesses that need credit during these uncertain times will be able to obtain it. However, our goal is to ensure that credit is available to any and all small businesses that need credit but are unable to access it on reasonable terms through traditional lending channels. To that end, the SBA is relaxing the criteria through which states or territories may formally request an economic injury declaration, effective immediately. Furthermore, once an economic injury declaration has been made in a state or territory, the new rules allow the affected small businesses within the state or territory to apply for a disaster assistance loan.”
The relaxed criteria, according to officials, will have two immediate impacts:
- Faster, Easier Qualification Process for States Seeking SBA Disaster Assistance—Historically, the SBA has required that any state or territory impacted by disaster provide documentation certifying that at least five small businesses have suffered substantial economic injury as a result of a disaster, with at least one business located in each declared county/parish. Under the revised criteria, states or territories are only required to certify that at least five small businesses within the state/territory have suffered substantial economic injury, regardless of where those businesses are located.
- Expanded, Statewide Access to SBA Disaster Assistance Loans for Small Businesses—SBA disaster assistance loans are typically only available to small businesses within counties identified as disaster areas by a governor. Under the revised criteria, disaster assistance loans will be available statewide following an economic injury declaration. This will apply to current and future disaster assistance declarations related to coronavirus.
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business.
“These loans can provide economic support to small businesses to help overcome the temporary loss of revenue they are experiencing,” officials said.
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