Small businesses hurt by coronavirus can apply for federal funds
Small businesses can receive up to $2M in funding to pay for fixed debts, payroll, accounts payable and other bills.
UPDATED MARCH 26
As more than 10,000 Virginians have applied for emergency unemployment assistance in the wake of the financial disruption caused by the coronavirus, Gov. Ralph Northam announced Thursday that Virginia small businesses can begin applying for low-interest loans of up to $2 million from a U.S. Small Business Administration fund aimed at helping companies pay their bills and continue operating during the coronavirus crisis.
Now that Virginia has federal disaster designation due to COVID-19’s spread, small businesses can visit the SBA’s website to apply. Eligibility is based on the financial impact to the business from COVID-19. The interest rate is 3.75% for small businesses and 2.75% for private nonprofits, with long-term repayment terms available, up to a maximum of 30 years. SBA loans of more than $25,000 will require assurance or collateral.
Because the SBA website has been overwhelmed with traffic and has been unavailable at times, the SBA urges people to download the application and fill it out offline. Completed forms can be emailed to [email protected] or mailed to U.S. Small Business Administration Processing and Disbursement Center, 14925 Kingsport Rd., Fort Worth, TX 76155.
“SBA is strongly committed to providing the most effective and customer-focused response possible to assist small businesses with federal disaster loans. We will be swift in our efforts to help these small businesses recover from the financial impacts of COVID-19,” said SBA Administrator Jovita Carranza. “SBA Customer Service Representatives will be available to answer questions about SBA’s Economic Injury Disaster Loan program and explain the application process.”
According to a news release Thursday from the governor’s office, the SBA approved an Economic Injury Disaster Loan declaration for Virginia following Northam’s request Wednesday.
When applying for the loan, small business owners are asked to describe their businesses’ losses as economic injury, which the SBA considers an inability to pay fixed debts, payroll, accounts payable and bills that could have been paid had the coronavirus not occurred, according to the SBA.
The SBA makes it clear that this is funding that must be paid back, and businesses will be evaluated and granted loans based on their ability to pay back the loans.
“This is not a grant. This is not a giveaway. It’s a loan,” said Chris Hatch, communications director for the SBA Mid-Atlantic Region. “They’re low-interest loans, but they are still loans.”
Loans are not necessarily first-come-first-served, but Hatch says to apply sooner than later and to provide as much information as possible when applying.
“It’s just like going to your bank and asking for a loan on anything else,” he said. “We have to make sure there’s an ability to repay.”
The state also declared Thursday that businesses can request to defer the payment of state sales taxes due Friday for 30 days through the Virginia Department of Taxation. When granted, businesses will be able to file no later than April 20 and incur no penalties, according to the governor’s office. Northam also requested that the state tax department extend the due date of individual and corporate state income taxes from May 1 to June 1, although the May 1 filing deadline will remain the same.
Interest will still accrue, the governor’s news release said.
Virginia Secretary of Finance Aubrey Layne Jr. said Thursday he expects the one-month delay in sales-tax payments will cost the state $145 billion, and localities will directly feel about $30 billion of that total.