COVID-19 Small Business Emergency Loan Update

We hope this finds you healthy and safe. We know many are seeking information and help in times like these.  Our team is doing our best to keep up to date on new information and we’ll be posting relevant information, resources, tips, and anything else we think might be helpful your way. 

Below are a few updates on the California IBank and Federal SBA Loan options available.  Gusto has also compiled an extensive list of resources by geographic regions here. 

SBA Economic Injury Disaster Loans

These loans are available for the purpose of paying fixed debts, payroll, accounts payable, and other bills that can’t be paid because of COVID-19. The amount you can borrow will be based on how your business has been affected, with a max borrowing limit of $2 million and interest rates are going to be under 4% with a 30-year term.  

We are recommending everyone to get their applications in now!  You do not have to specify the amounts you are requesting. Below is what you’ll need: 

Gather three years of business and personal tax returns

• If you haven’t filed your 2019 taxes make sure you have your end-of-year financials (you will be send them after the application is submitted) 

Prepare the following required forms:

• SBA Form 413D: Personal Financial Statement (link – https://marginedge.us13.list-manage.com/track/click?u=ca30c42b4f0c21eb149b44466&id=c147a12e5f&e=c8bccff5ee)
• IRS Form 4506T: Disaster Request for Transcript of Tax Return (link – https://marginedge.us13.list-manage.com/track/click?u=ca30c42b4f0c21eb149b44466&id=c147a12e5f&e=c8bccff5ee)
• SBA Form 2202: Business Debt Schedule of all current debts (link – https://disasterloan.sba.gov/ela/Documents/Schedule_of_Liabilities.aspx)

Standard SBA Loans

You can also apply for a standard 7(a) SBA loan, which will likely be processed and disbursed more quickly than an SBA Disaster Loan, albeit with a higher rate (5-6%) and a shorter payback period.  

Start a conversation on these with a banker you are already close to and who knows you well enough to know you will be able to pay back the debt.  If you need any banker referrals, reply to this email. General requirements, that we have been told will apply, are: 

• FICO score > 650
• No bankruptcies in the last 5 years
• In business for at least 2 years
• Positive cash flow last year

Legislation working its way through Congress appears to enhance 7(a) SBA loans with the following proposed changes:

• Allow 7(a) borrowers to use loan proceeds for payroll support, including paid sick leave
• Waive all fees for all 7(a) loans for one year for both lenders and borrowers 
• Provide a 90% government loan guarantee (incentivizing partner lenders to offer more SBA loans) 
• Increase the limit for SBA Express Loans (which function as a Line of Credit) from $350,000 to $1 million
• SBA Express loans have a 36-hour turnaround time

California IBank Disaster Relief Loan Guarantee Program

California’s IBank, a unit within the Governor’s Office of Business and Economic Development, is providing disaster loans of up to $1 million for small business borrowers as well as $500 to $10,000 loans for low-wealth entrepreneurs in declared disaster areas. 

We are still gathering more information on how to apply for these loans.  You must apply at a partner bank listed on this website.  Reach out to the banks directly and please share any information you receive with us so we can update others.  

All of this is taking shape in real-time, and our team is working diligently to stay on top of the latest developments. With the stimulus bill passed last night, more changes are likely on the way, but we are hopeful they only increase the size and scope of relief.