Apply for SBA Economic Injury Disaster Loans

Updated as of March 19, 2020, 2:05 pm

Effective March 19, 2020, Colorado has been declared an
eligible disaster zone. The U.S. Small Business Administration is offering
designated states and territories low-interest federal disaster loans for
working capital to small businesses suffering substantial economic injury as a
result of the Coronavirus (COVID-19). All 64 Colorado counties have been
advanced by Governor Jared Polis for inclusion in the U.S. Small Business
Administration Economic Injury Disaster Loan Program.

Based on information that has been release so far, here is
the best information on how to prepare your business:

ELIGIBLE ENTITIES:

  *   Applicants must meet the SBA requirements of a small
business (500 employees or fewer)
  *   Businesses directly affected by COVID-19
  *   Businesses that offer services directly related to the businesses
in the declaration
  *   Other businesses indirectly related the industry that are
likely to be harmed by losses in their community (Example: Manufacturer of
widgets may be eligible as well as the wholesaler and retailer of the product)
* Non—profit businesses

INELIGIBLE ENTITIES:

  *   Agricultural Enterprises: If the primary activity of the
business (including its affiliates) is as defined in Section 18(b)(1) of the
Small Business Act, neither the business nor its affiliates are eligible for
EIDL assistance.
  *   Religious Organizations
  *   Charitable Organizations
  *   Gambling Concerns (Ex: Concerns that derive more that 1/3
of their annual gross revenue from legal gambling activities)
  *   Casinos & Racetracks (Ex: Businesses whose purpose for
being is gambling (e.g., casinos, racetracks, poker parlors, etc.) are not
eligible for EIDL assistance regardless of 1/3 criteria above.
  *   Cannabis Industry

LOAN APPROVAL CRITERIA:

  *   Credit History: Applicants must have a credit history
acceptable to SBA.
  *   Repayment: SBA must determine that the applicant’s
business has the ability to repay the SBA loan.
  *   Eligibility: The applicant business must be physically
located in a declared county and suffered working capital losses due to the
declared disaster, not due to a downturn in the economy or other reasons.

HOW MUCH YOU CAN BORROW:

  *   Eligible entities may qualify for loans up to $2 million
maximum, with amount over $25,000 requiring collateral support.
  *   The interest rates for this disaster are 3.75 percent for
small businesses and 2.75 percent for nonprofit organizations with terms up to
30 years.
  *   Eligibility for these working capital loans are based on
the size (must be a small business) and type of business and its financial
resources.

HOW THE FUNDS CAN BE USED:

These working capital loans may be used to pay fixed debts, payroll, accounts
payable, and other bills that could have been paid had the disaster not
occurred. The loans are not intended to replace lost sales or profits or for
expansion. Funds cannot be used to pay down long-term debt.

WHAT IS NEEDED TO APPLY:
  *   Completed SBA loan application (SBA Form 5).
  *   Tax Information Authorization (IRS Form 4506T) for the
applicant, principals, and affiliates.
  *   Complete copies of the most recent Federal Income Tax
Return.
  *   Schedule of Liabilities (SBA Form 2202).
  *   Personal Financial Statement (SBA Form 413).
  *   Income, balance sheet, and cash flow documents.
  *   Other Information may also be requested.

OTHER INFORMATION THAT MAY BE REQUESTED:

  *   Complete copy, including all schedules,
of the most recent Federal income tax return for principals, general partners
or managing members, and affiliates (see filing requirements for more
information).
  *   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.
  *   A current year-to-date profit-and-loss statement.
  *   Additional Filing Requirements (SBA Form 1368) providing
monthly sales figures. (This is especially important for Economic Injury
Disaster Loans.)

HOW SOON WILL BUSINESSES RECEIVE MONEY?

  *   Small businesses that submit complete loan packages could
receive the money within three (3) weeks.
  *   Incomplete information and verification of collateral will
delay the approval process.

HOW TO APPLY:

  *   Applicants may apply online using the Electronic Loan
Application (ELA) via SBA’s secure website at https://disasterloan.sba.gov/ela.
  *   Paper loan applications can be downloaded from www.sba.gov/disaster<http://www.sba.gov/disaster>.
Completed applications should be mailed to: U.S. Small Business Administration,
Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
  *   Disaster loan information and application forms may also
be obtained by calling the SBA’s Customer Service Center at 800-659-2955
(800-877-8339 for the deaf and hard-of-hearing) or by sending an email to disastercustomerservice@sba.gov<mailto:disastercustomerservice@sba.gov>.

RECOMMENDATIONS:

  *   Include the specific disaster in your application –
specifically reference “COVID-19” or Coronavirus.
  *   Apply online vs by mail.
  *   Write your password down; neither the system nor any
personnel are able to retrieve it.
  *   Save your work at every prompt.
  *   Do not rush through the application. Check and recheck the
filing requirements to ensure that all the needed information is submitted. The
biggest reason for delays in processing is due to missing information.
  *   Make sure to complete all filing requirements before
submitting the application and forms.
  *   Be sure to use the same contact information (business name
and the name of all owners) that you use on your federal tax returns.
Double-check that they match.
  *   If your tax returns reference other businesses that you
own, you must also submit those tax returns in order to avoid processing
delays.
  *   If more funds are needed, applicants can submit supporting
documents and a request for an increase. If fewer funds are needed, applicants
can request a reduction in the loan amount.
  *   If the loan request is denied, the applicant will be given
up to six months in which to provide new information and submit a written
request for reconsideration.

The Larimer SBDC and Loveland Business Development Center
will have additional consulting staff available to help small businesses
navigate this process. We recommend you start the application process early as
there is no requirement to accept funds if you are approved. Working with an SBDC
consultant will help you navigate the process and alleviate some of the stress
of this process.

Register for consulting at: www.LovelandBusiness.com/consulting

Kat Rico

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