In the wake of the coronavirus pandemic (COVID-19), small businesses across the country have been forced to significantly alter their operations. Government-mandated restrictions are leaving many small business owners in jeopardy of failing to maintain normal business operations, make payroll, and continue paying off debts and other bills. We have already seen unprecedented workforce layoffs and business closures as COVID-19 continues to spread.
Fortunately, the U.S. Small Business Administration (SBA) offers Economic Injury Disaster Loans (EID Loans) through a program designed to provide monetary relief to small businesses facing economic hardship due to no fault of their own. Ohio is now among the many states that has been approved by the SBA as a declared disaster area based on the disruptions caused by COVID-19.
To be eligible for an EID Loan, you must either own a small business, small agricultural cooperative, or have a private non-profit organization. As for whether your business qualifies as a “small” business that is eligible for Federal Government programs such as an EIDL Loan, the SBA has an established Table of Small Business Size Standards that is broken down into specific industries. These size standards define the largest a business can be to still qualify for federal programs. The standards vary by industry and are generally based on a business’s employment count (including full and part time employees) or the amount of its annual receipts (i.e. gross annual income plus the cost of goods sold). To determine whether your business fits within the size standard for its particular industry, consult the U.S. Small Business Administration Table of Small Business Size Standards Matched to North American Industry Classification System Codes.
EID Loans can be for as much as $2 million, are repayable over a 30-year period, and are coupled with low interest rates: 2.75% for non-profits and 3.75% for small businesses. The precise terms of each EID Loan may vary depending on the nature of a business and its ability to repay the loan.
Beginning the EID Loan application process is easy. Simply create an account with the SBA and follow the prompts to complete an application on the U.S. Small Business Administration website.
In addition to the application, you will need to complete an IRS Form 4506-T that authorizes the IRS to provide your tax return information to the SBA.
Although there remains uncertainty as to the long-term effects of COVID-19, the EID Loan program offers some much-needed relief for small business owners struggling amid this crisis.
The attorneys at McCarthy Lebit are continuing to stay apprised of COVID-19 developments and remain available to discuss any needs that your business may have during these uncertain times.
