Disaster Relief Loan Programs Announced

The United States Small Business Administration (“SBA”) and the State of Minnesota are making disaster relief loans available.

Here is the link to the SBA website: https://disasterloan.sba.gov/ela/

This is a direct loan from the SBA, and the application is online and the website above. These loans do not go through the bank, they are direct loans from the SBA. The loans can range up to $2,000,000 and will be between 2.75-3.75% with up to a 30 term. The SBA will decide the loan amount and terms. I personally recommend that you apply now to get in the queue, as the demand for these loans might be significant and may cause processing delays.

You don’t have to accept the loan if you’re not comfortable with the terms. It seems their goal is get funding out to cover six months of operations. Payments are deferred for 12 months from closing, though interest will accrue. They are saying to expect a three week turn around, but in my experience, the sooner the application, the better.

A couple of points to know about SBA Economic Injury Disaster Loans:

  • EIDL loans of up to $2M are now available for small businesses and private non-profits
  • Funds can pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
  • The current interest rate is 3.75% for small businesses, non-profit rate is 2.75%–Note, these are not 0%, and are not forgivable.
  • The terms can be extended up to 30 years to keep it affordable.
  • These loans are only intended as working capital loans utilized to assist with impact caused by the coronavirus emergency efforts.
  • Loan applications will be evaluated by SBA loan officers. Criteria includes:
    • Credit history acceptable to the SBA
    • Repayment abilities
    • Eligibility – business must be headquartered in a disaster declared state (Minnesota is, as of Sunday) and suffered working capital losses due to the declared disaster (not a general downturn in business due to the economy or other reasons).

State of Minnesota

The state of Minnesota just approved a loan program as well, the Small Business Emergency Loan Program.

  • Loans from $2,500 to $35,000
  • Interest Free
  • Five year payback
  • Application is through one of the certified nonprofit lenders. You can find a complete list at the Minnesota Department of Employment and Economic Development website. A couple of the Certified nonprofit lenders is the Metropolitan Consortium of Community Developers, 612-789-7337 or Neighborhood Development Center, 651-291-2480.

Nonprofit Organizations:

From my research, I conclude that SBA’s definition of Private Nonprofit is likely very different than what is normally considered as such. Everything I have read gets at the concept that they are not government organizations, and are providing services (food kitchens, libraries, community centers etc). While this doesn’t guarantee eligibility, I think this is very positive.