Unfortunately, the COVID-19 pandemic has created a very uncertain future for many small businesses across the country. In order to help alleviate some concerns in our region, the Southeast Kentucky Economic Development Corporation (SKED) out of Somerset hosted a webinar Tuesday afternoon in conjunction with the U.S. Small Business Administration (SBA) to explain the Economic Injury Disaster Loans (EIDL) that are currently being made available to small business owners in order to help them keep the doors open until we have weathered this storm.
Brett Traver, Executive Director of SKED, opened Tuesday’s webinar with a quick rundown of all the topics that would be covered. Those included criteria for approval of a disaster loan, how these loans can be used, how they are different from other loans, basic filing requirements, ineligible entities and how to apply.
Once the main presentation got underway, Cherie Guilford, Economic Development Specialist working out of the SBA’s Kentucky District Office in Louisville, explained that Economic Injury Disaster Loans are available to small businesses, small agricultural cooperatives, small aquaculture businesses and most private non-profit organizations.
Guilford said criteria for EIDL approval would include an acceptable credit history, the ability to repay the loan, and the business must be physically located in a declared county, having suffered working capital losses due to the declared disaster.
If a business is deemed eligible to receive one of these loans, they could qualify to receive up to $2 million. The interest rates for this disaster are 3.75 percent for small businesses, 2.75 percent for non-profits, with terms up to 30 years. Any funds granted through one of these loans can be used to pay debt, for payroll, accounts payable, and other bills that “could have been paid had the disaster not occurred.”
A slide was then shown explaining collateral requirements, stating that EIDLs over $25,000 would require collateral. It also informed that the SBA takes real estate as collateral when available, and would not decline a loan for lack of collateral, but would require borrowers to pledge whatever is available.
As for how these loans differ from others, Guilford explained that the SBA’s EIDL funds come directly from the U.S. Treasury. Applicants do not go to a bank to apply, but instead apply directly to the SBA’s Disaster Assistance Program at DisasterLoan.sba.gov.
There is no cost to apply for these loans, and no obligation to accept the loan if it is offered. Applicants can have an existing SBA Disaster Loan, and still qualify for an EIDL for this disaster, but those loans cannot be consolidated.
At this point in the presentation, Guilford shared some breaking news that, earlier Tuesday, the SBA had signed off on an executive order that states any small business with an existing loan would see that loan going into automatic deferment. This means that, for example, if a business had already taken out a loan earlier this year due to the historic flooding that took place in our region, that loan would be put into automatic deferment until December of this year should that same business apply for and receive another loan to help with the current disaster.
As for basic filing requirements, several slides were dedicated to discussing the forms and other information that would be required. Filing electronically was strongly encouraged, and more details on what applicants should expect can be obtained by e-mailing questions to firstname.lastname@example.org or by calling the SBA’s Customer Service Center at 1-800-659-2955. For further assistance, information is also available online at www.sba.gov/local-assistance.
To contact SKED, look them up on Facebook or visit www.southeastkentucky.com. The corporation is also assisting small businesses during the COVID-19 crisis through Be Boss Online training, which offers a series of how-to videos that will “help you reach your customers now, and into the future.” Those interested in learning more about Be Boss Online can contact Small Business Training Director Amanda Kelly via e-mail at amanda@BeBossOnline.com.