SBA Offers Recommendations When Applying For Disaster Loans Coronavirus
WINCHESTER – The Small Business Administration system encountered issues on Tuesday, and the SBA is recommending some options to resolve these issues.
Christine Kriz, director of the Lord Fairfax Small Business Development Center, said people should use Internet Explorer or Edge as their web browser when trying to ask for help instead of Google Chrome.
The SBA also recommends that people try to apply between 7 p.m. and 7 a.m., when fewer people may be on the system.
The LFSBDC team are available to help people apply and are part of the economic development teams for the counties of Winchester and Frederick, Clarke and Shenandoah. Its website is https://lfsbdc.org/has-your-business-been-impacted-by-covid-19/ .
Kriz also shared some frequently asked questions about SBA disaster loan financing:
Question: Will all EIDL COVID-19 loans have a term of 30 years?
A: All loans are for 30 years.
Question: Will all COVID-19 EIDL loans be for 12 months without interest and without payment?
A: Payment deferral for one year but interest begins to accrue on disbursement
Question: Will the loan amount equal six months of operating expenses?
A: Yes. Loans will be based on 6 months of operating expenses.
Question: Approval will be based on credit score, not cash flow analysis. Do we know what the range of credit scores is?
A: Partly correct, the business must demonstrate the long-term ability to repay the loan. No response on credit score due to individual circumstances, there may be justification for low scores due to impact of COVID-19.
Question: Will EIDL loans be canceled in the future?
A: At present, the President’s recently signed Coronavirus Preparedness and Response Supplementary Credit Act does not allow loan cancellation, so borrowers should expect to repay the loans. EIDL.
Question: If we are an ESOP owned business, do we need to submit personal information for all owners?
A: Only 20% of homeowners need to submit tax returns to an ESOP or private company
Question: How much time do I (as a business owner) have to decide whether or not to take out the loan?
A: Please apply as soon as possible.
Question: Can a timeshare be used as collateral?
A: A timeshare cannot be used as collateral. Only personal residences (1st, 2nd, 3rd, 4th or 5th trusts)
Question: Is there a penalty for early repayment of the loan?
A: There is no early repayment penalty.
Question: Are the loans assumable later?
A: No loan is assumable.
Question: Can the loan be used as a line of credit or do I have to take the entire loan after approval? If so, is the interest calculated on the total loan amount or only on the amount I use?
A: This is a 30-year, 3.75% term loan with a one-year grace period. Interest accrues that year. No line of credit is available.
Question: If approved, can I accept the loan and defer distribution of the money?
A: If you accept the loan, you must take it. However, you don’t have to take the full amount approved, but it is recommended that the business owner take the full amount so that you don’t have to reapply later.