Frequently Asked Questions Regarding COVID-19 and the SBA Disaster Loan Program

March 20, 2020 Clay Glasgow, CPA, ABV, CFF, CFE, Advisory Partner

small business

We have been diligently monitoring developments in opportunities for economic support available to businesses that have been hurt by COVID-19. One avenue for financial assistance is the Small Business Administration’s (SBA) Economic Injury Disaster Loan program. The Coronavirus Preparedness and Response Supplemental Appropriations Act, recently signed by the President, allows the SBA to provide loan assistance to businesses in designated states and territories impacted by COVID-19.

In the remainder of this article, we’ll be answering some frequently asked questions regarding the SBA disaster loan program.

Frequently Asked Questions Regarding the SBA Disaster Loan Program

How does the Economic Injury Disaster Loan program work with respect to COVID-19?

For the loan program to be implemented, the governor of each state must first declare a disaster for the state or for certain counties within the state related to the coronavirus. Once the declaration is made, further information on the application process will be made available to small businesses within the state or counties.

What can the loans be used for?

The loans are for working capital which includes fixed debts, payroll, accounts payable, and other bills that can't be paid due to the Covid-19 impact. It does not cover lost sales.

Who is eligible for the loans?

The loans are available to small businesses and non-profit organizations. In order to be eligible, you must be a small business (500 employees or less). Common eligible businesses are listed below:

    • Small businesses affected by the disaster including retailers, restaurants, recreational facilities, tourism-based businesses, manufacturers, owners of rental property, hotels, wholesalers, and many more.
    • Private nonprofits
    • Small agriculture cooperatives are eligible, but agricultural enterprises are not
    • Small aquaculture businesses

How much money is available and what are the loan terms?

The Economic Injury Disaster Loan program offers up to $2 million in assistance in the form of a secured loan and up to $25,000 in the form of an unsecured loan. These loans are repayable over up to a maximum of 30 years, determined on a case by case basis. The interest rate is 3.75% for small businesses and 2.75% for nonprofits. You will not be asked how much you would like to borrow. The SBA uses the information you provide to determine the loan amount

What should businesses interested in the program be doing now?

First, check the SBA’s list of current disaster declarations at here. If your state or county is listed, you can begin your registration and application here.

If your state or county is not listed, that means your area has not yet been declared a COVID-19 disaster area. However, we recommend that businesses take steps now to prepare for the process so that the application can be made immediately upon declaration. Specifically, businesses should gather or prepare the information that the SBA will require to complete the application. Businesses will be required to submit the following documents in connection with the loan application:

    • Tax Information Authorization (IRS Form 4506-T, signed by each applicant, each principal owning 20 percent or more of the applicant business, each general partner or managing member, and any owner who has more than 50 percent ownership in an affiliate business, such as a parent, subsidiary, and/or other businesses with common ownership or management;
    • Copies of the most recently filed Federal income tax return for the applicant business;
    • Personal financial statement for each principal owning 20 percent or more of the applicant business, and each general partner or managing member;
    • Schedule of liabilities listing all fixed debts;
    • If the most recent Federal income tax return has not been filed, a year-end balance sheet and profit-and-loss statement for that tax year;
    • A current year-to-date profit-and-loss statement;
    • Contact information and social security numbers for all applicants;
    • Employer Identification Number (EIN) for business applicants;
    • Insurance information;
    • Financial information (e.g. income, account balances and monthly expenses) - Know the total amounts and payments due for debts that will be paid over the next 10 months or longer (i.e. mortgages, student loans, credit cards, etc.).

What do I need to know while applying?

See other key information below:

    • Use Internet Explorer or Mozilla Firefox to apply.
    • The 'Help Button' provides useful information for each page.
    • Use the 'Save Button' frequently.
    • Be patient and keep trying if you experience slow load times.

What to expect after an application is submitted?

    • You will receive email confirmation that your application has been submitted.
    • You will receive an email letting you know that your application is under review.
    • BE PREPARED: You will be contacted by a representative from the SBA.
    • Have your monthly expenses and financial projections ready to discuss.

The SBA has approved the disaster declaration statewide for Arkansas and Oklahoma. All Arkansas and Oklahoma small businesses affected by COVID-19 may now apply for disaster loans. We are continuing to monitor developments in the availability of financial assistance to companies hurt by this crisis.

HoganTaylor's Advisory Practice

If you have any questions about this content, or if you would like more information about HoganTaylor's Advisory practice, please contact the author of this article, Clay Glasgow, CPA, ABV, CFF, CFE, Advisory Partner, at

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.


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