The COVID-19 pandemic has significantly impacted small to medium-sized businesses across the state, and the country.
As a result, Congress approved $1 billion in funding made available to the U.S. Small Business Administration (SBA) earlier this March.
On March 19, the SBA approved Gov. Gretchen Whitmer’s request for a statewide Economic Injury Disaster Loan (EIDL) declaration, opening the door for Michigan small businesses to access low-interest loans.
With the EIDL designation now secured, small businesses, small agricultural cooperatives, and nonprofits that have suffered substantial economic losses as a result of the COVID-19 outbreak can apply for low-interest loans of up to $2 million as part of the approved congressional SBA funding.
Important guidelines about applying for EIDL loans
First, The EIDL is a low-interest, 3.75% (2.75% for non-profits), fixed-rate loan for businesses without credit available from other institutions. If a business has credit available elsewhere, they will not be eligible for the EIDL.
Second, the loan offers up to a 30-year repayment term, which is determined on a case-by-case basis.
There is a three-step process for the loans:
- Apply for the loan: These loans are applied for online, in-person at a disaster center or by mail.
- The property will be verified, and a loan processing decision will be made.
- The loan is closed and the funds are disbursed.
The initial disbursement for economic injury is $25,000, and a case manager will be assigned to make sure all loan conditions are met and to schedule subsequent disbursements.
Online applications are open and state officials are encouraging applicants to start the process as soon as possible.
If you have any questions about how an SBA loan will affect your tax situation, reach out to the experts at Morgan & Associates. We can schedule a phone call to talk through your options.