March 26, 2020 Loan Programs for COVID-19 Impacted Businesses and Nonprofit Organizations
KEEPING YOU INFORMED…
In an effort to provide assistance to businesses and certain nonprofit entities impacted by the COVID-19 pandemic, the United States Small Business Administration (the “SBA”) has a new program about which we want you to be aware. An Economic Injury Disaster Loan (“EIDL”) may be available to provide you with funds to keep your business running and offset lost revenue.
An EIDL can be used to pay fixed debts, payroll, accounts payable and other expenses that could have been paid had the pandemic not occurred.
The EIDL can be for an amount up to $2,000,000 and will bear interest at the rate of 3.75% per annum for businesses and 2.75% for nonprofit organizations. The term of the loan can be up to 30 years.
There is no fee for applying for an EIDL loan. You can find the application and apply online at https://disasterloan.sba.gov. You can also download the application form from www.sba.gov/disaster and mail the completed form and supporting documentation to the SBA at U.S. Small Business Administration Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, Texas 76155. The SBA is encouraging applicants to use its online platform as a faster, more efficient means of submitting an application. Generally the time for review and approval of an SBA loan is approximately 25 business days, but given the anticipated volume of applicants, it is likely that the approval process may take longer.
The economic stimulus legislation currently pending in Congress may authorize additional loan programs by the SBA providing more immediate relief to qualifying businesses. We will keep you updated on these programs as they become available.
For businesses located within the five boroughs of New York City, there are two additional programs designed to help businesses retain employees and stay operational. Pursuant to the NYC Employee Retention Grant Program, businesses with one to four employees may apply for a grant of up to $27,000 to cover 40% of payroll costs for 2 months. To be eligible, the business must show (i) the pandemic has caused the business to experience at least a 25% decrease in revenue; (ii) the business has been in operation for at least 6 months; and (iii) there are no outstanding judgments or liens against the business.
Under the NYC Small Business Continuity Loan Fund Program, a business with 1-99 employees may be eligible for a zero interest rate loan of up to $75,000. To be eligible, the business must demonstrate: (i) it has experienced a decrease in revenue of 25% or more as a result of the pandemic; (ii) it has the ability to repay the loan; and (iii) there are no outstanding judgments or liens against it.
The applications for the NYC programs and additional information may be found at https://www1.nyc.gov/site/sbs/businesses/covid19-business-financial-assistance.page.
If you have questions or would like assistance completing an application for any of these loan programs, please contact Jeff Zankel, Steve Godsberg, Patricia Delaney or one of our other attorneys at the direct dial number or email address indicated on the contact information page attached to this memo.
THIS MEMORANDUM IS MEANT TO ASSIST IN THE GENERAL UNDERSTANDING OF THE CURRENT LAW. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. THOSE WITH PARTICULAR QUESTIONS SHOULD SEEK THE ADVICE OF COUNSEL.
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