If you’re a small business owner struggling financially due to the COVID-19 outbreak, there is help available. The SBA is offering Economic Injury Disaster Loans of up to $2 million – here are answers to the FAQs. Q: How much funding can I get? Small businesses that need support through the disaster recovery period can borrow as much as $2 million. The Economic Injury Disaster Loan (EIDL) provides an interest rate of under 4%. Q. How do I know if I qualify for Disaster Assistance? The best way to determine whether you meet the criteria for a “small” business is through the North American Industry Classification System Codes and the Table of Small Business Size Standards through the SBA. Keep in mind that in order to determine qualification, a business is gauged both on its own without affiliates and when combined with its affiliates. Affiliates is a term that is used broadly when it comes to Disaster Loans: click here to see the specific regulations. Both with and without affiliates, to qualify the business is not allowed to go above the established standard for its industry, and the rule on whether to use the numbers for the business alone or with affiliation is based on whichever of the two is higher. To get an idea of what would be considered small for different industries, the standard for the manufacturing industry dictates that for a business to be considered small it can’t employ more than 500 people. For a sit-down restaurant to qualify as small, it cannot average more than $8 million in revenues per year; and for retailers the average annual sales can’t be over $7 million. Q. Is there a maximum amount of assistance that I can get? Yes. No more than $2 million is available under the program currently being used. Q. Are there limits to what the loans can be used for? The purpose of the loan is to help businesses survive through the disaster recovery period and to mitigate the economic damages that it suffers. The loans are explicitly only to be used for that purpose until things get back to normal. This means that businesses that have suffered financial injury can apply for an EIDL to cover their losses and to provide what they need to continue business operations to replace what they would have needed under circumstances prior to the crisis. The amount cannot exceed that threshold, and will be calculated based on three criteria: What your total debt is What your operating expenses are for the disaster recovery period and what will provide working capital during that time that puts you in a reasonable position What your working capital position and manageable expenses would have been had there been no disaster When making the determination, the SBA will not necessarily determine that the amount of financial injury you demonstrate will be the same amount that you are eligible to borrow. Each decision will be based on the data and backup you provide as well as what they view as the reasonableness of your ask. Additionally, the loans cannot be used to make improvements or grow the business beyond making repairs to damage caused by the disaster. The only exception is if there are local building codes that demand changes that result in expansion. Q. Are the terms of the loans reasonable? Terms will be dependent upon the availability of alternative sources of credit, and how much time it is likely for the business to need to repay the loan, but they can have interest rates of 4% or less and maturity of up to thirty years. Understanding the Application Process Q. Does my credit affect my ability to get a loan? Your credit history will definitely be taken into consideration by the SBA. Additionally, you will need to demonstrate your ability to repay the loans when they come due, and you will probably be required to pledge collateral such as real estate to secure the loan, though lack of collateral will not preclude approval. For loans of $25,000 or more, whether for a physical business loan or an EIDL loan, collateral will be particularly important. The SBA is required under the EIDL system to review the financial statement for the business, as well as for stakeholders including each officer, each partner and director, and each stockholder whose ownership stake is twenty percent or greater. Personal repayment will need to be guaranteed by the business’ principals, and those individuals may also be required to pledge additional collateral in order for the loan to be secured, though this requirement may be waived for loans relating to the COVID-19 crisis. Q. What other information is required beyond credit history? Your application must include a signed and dated IRS Form 4506-T, which will serve as notice to the IRS that your tax return information can be released to the SBA so that they can consider your loan. The application also requires current information on your finances, including: