March 18, 2020 | By Patrick T. McCloskey
On March 17, 2020, the United States Small Business Administration (“SBA”) announced that it had eased the criteria for states or territories seeking an economic injury declaration related to COVID-19.
Among other things, the announcement reported that the SBA is offering designated states and territories low interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. Upon a request received from a state’s Governor, the SBA will, under authority granted by the Coronavirus Preparedness and Response Supplemental Appropriations Act, issue an Economic Injury Disaster Loan declaration.
The SBA’s office of Disaster Assistance will coordinate with the affected state’s Governor to submit the Request for Economic Injury Disaster Loan assistance.
Once a declaration is made by the SBA, the information on the application process will be made available to affected small businesses within the applicable state.
According to the website of the SBA’s New York District Office, as of March 17, 2020, only Westchester, Dutchess and Putnam counties in New York State have received disaster declarations related to COVID-19, in each case since January 31, 2020. Presumably this will be expanded to include all counties within New York City, as well as Nassau and Suffolk, in the near term.
The disaster relief loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the COVID-19 impact. The amount of each SBA disaster relief loan can be up to $2 million and the interest rate is 3.75% (2.75% for not-for-profit corporations). Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
The New York City Department of Small Business Services has also announced financial assistance for qualifying small businesses in New York City, consisting of an Employee Retention Grant Program and a Small Business Continuity Fund. Please see our blog post for a summary of these programs.
This blog post is for general informational purposes only and does not constitute legal advice. No one should rely on the information in this blog post without seeking appropriate legal, accounting, tax or other appropriate advice from an attorney, accountant or other professional properly licensed in the applicable jurisdiction(s).