Local governments across the nation have ordered the shutdown of a wide variety of businesses in an effort to slow the spread of the COVID-19 virus. While this shutdown is necessary to slow the spread, it has had, and will continue to have, detrimental effects on many businesses. To help combat the negative economic effects of COVID-19, both the federal and state governments are offering economic assistance programs, including loans.
Federal Small Business Association
On March 11, 2020, President Trump addressed the nation about the COVID-19 virus for one of the first times. In his address, President Trump called for an additional $50 billion to be allocated to the Small Business Association (SBA) and for the immediate availability of SBA loans to small businesses. The SBA has since announced that it would provide more low-interest loans for qualifying small businesses through its Economic Injury Loan program. The SBA determines whether your business qualifies as a small business by looking to both revenue and number of employees. Additionally, your business must have been founded prior to January 31, 2020.
The maximum loan amount available is $2 million and the amount a business is awarded is calculated using an analysis of the business’s creditworthiness. The SBA loans carry a 3.75% interest rate for small businesses and 2.75% interest for nonprofits. The repayment term for the loan can be up to 30 years, but the exact term varies based on the business’s ability to repay the loan. Unlike the Florida Disaster Loan, discussed below, the SBA does require businesses to submit collateral for large loans.
To qualify for an SBA loan, a business must demonstrate that its business has been or will be effected by the coronavirus pandemic. The SBA allows businesses to use any financial documents to demonstrate expected losses but it particularly looks for month over month sales projections. If you think your business may benefit from a SBA loan, visit the SBA website to apply. The application will ask for a variety of information, including which disaster declaration your business is relying on for the loan. When selecting your disaster declaration in your application, ensure you use the state in which your business resides, even if its main operations is elsewhere.
Facebook Small Business Grant Program
Facebook recently announced that it would provide relief for small businesses worldwide. Facebook has allocated $100 million in cash grants for up to 30,000 eligible small businesses. The social media giant also is providing an advertisement opportunity to those small businesses through an ad credit. Small businesses can apply for the grant and ad credit by visiting Facebook’s website at www.facebook.com/business/grants.
SBDC Florida Disaster Loan
In addition to the federal and private resources available for small business, Florida has established the Disaster Loan program which “aims to provide short-term, interest-free loans to small businesses experiencing economic injury from COVID-19.”
The loan is available for up to $50,000, and in some circumstances $100,000. The loan is a short-term loan that carries no interest for the first year. If the business cannot repay the loan within a year, the loan will carry 12% interest for each year moving forward until it is repaid. However, the loan does not require collateral be put forth by the business.
Who is Eligible for a Florida Disaster Loan?
The state of Florida has outlined requirements for small businesses to be eligible for a disaster loan. To qualify for one of the loans, the business must be: (1) a privately held small business that maintains a place of business in the state of Florida, (2) located in a designated disaster area, (3) established prior to March 9, 2020, and (4) able to demonstrate economic injury as a result of the disaster. However, the state has announced that businesses deriving more than one-third of gross annual revenue from legal gambling activities or businesses that may promote indecent behavior are ineligible for the loan. International businesses operating in Florida are not eligible to apply for the loan.
Requirements of a Florida Disaster Loan
If a business is eligible to receive a loan, the owner of the business must sign an agreement stating that the proceeds of the loan will be used “only for purposes of maintaining or restarting the business in the designated area.” Additionally, the borrower must certify that any insurance proceeds recovered due to the disaster will be used to repay the loan.
How to Apply for a Florida Disaster Loan
If your business would like to apply for a Florida Disaster Loan visit www.floridadisasterloan.org. Businesses will fill out an application and submit it to the Florida Small Business Development Center (SBDC). A loan committee from the SBDC will review the application to ensure the business is eligible and will contact the business if it has been approved for the loan.
 Office of Commissioner Jorge Fors