SBA Updates

Low-interest SBA disaster loans for working capital

4 March, 2021

U.S. Small Business Administration is now accepting applications for low-interest federal disaster loans for working capital (Economic Injury Disaster Loans) for small businesses and private, non-profit organizations in designated counties of California and other states to help alleviate economic injury caused by the Coronavirus (COVID-19).

To access SBA assistance, go to the Disaster Loan Assistance portal.  You can click on “Eligible Disaster Areas” to see what counties have been designated as coronavirus disaster affected.  As of March 16, 2020, the following 35 California counties were designated:

Alameda, Alpine, Amador, Calaveras, Contra Costa, El Dorado, Imperial, Kern, Lake, Los Angeles, Madera, Marin, Mariposa, Mendocino, Merced, Mono, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, San Joaquin, San Mateo, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tuolumne, Ventura, Yolo

Economic Injury Disaster Loans are working capital (rather than loans for physical damage) to help small businesses and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster.  These loans are intended to assist through the disaster recovery period.

Federal law limits these to $2,000,000 maximum for alleviating economic injury caused by the disaster, and the actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit.  SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.

These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.  The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible.  The interest rate for non-profits is 2.75%.

SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years.  Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

To apply for Economic Injury Disaster Loans, click on “Apply Online” and create an account and password.  Then submit your application.  An explanation of the SBA disaster application loan process is here.  The application requires submitting the following forms (copies of which are available here):

  • Business Loan Application (SBA Form 5) completed and signed by the business applicant.
  • IRS Form 4506-T completed and signed by Applicant business, each principal owning 20% or more of the applicant business, each general partner or managing member and, for any owner who has more than a 50% ownership in an affiliate business. (Affiliates include business parent, subsidiaries, and/or businesses with common ownership or management).
  • Complete copies, including all schedules, of the most recent Federal income tax returns for the applicant business; an explanation if not available. 
  • Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant (if a sole proprietorship), each principal owning 20% or more of the applicant business, each general partner or managing member.
  • Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used).

Additional information may also be necessary to process your application:

  • Complete copies, including all schedules, of the most recent Federal income tax returns for each principal owning 20% or more of the applicant business, each general partner or managing member, and each affiliate when any owner has more than a 50% ownership in the affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management.
  • If the most recent Federal income tax return has not been filed, a year-end profit and loss statement and balance sheet for that tax year are acceptable.
  • A current year-to-date profit and loss statement.
  • Additional Filing Requirements (SBA Form 1368) providing monthly sales figures.

For additional information, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or email disastercustomerservice@sba.gov or visit www.sba.gov/disaster.