Business in the Wake of Covid-19: SBA Disaster Loan Assistance
Throughout the country, businesses large and small have been affected by quarantines and state or county mandated closings. In Michigan, areas where people gather, such as restaurants and entertainment venues have been immediately affected by the governor’s Executive Order 2020-9 (https://www.michigan.gov/whitmer/0,9309,7-387-90499_90705-521789--,00.html), but as infection rates from community transmission rise, other industries are likely to also feel some financial pain, at the same time that we all are trying to navigate the emotional anxiety and fear the pandemic is foisting upon us.
Many organizations have compiled helpful lists of a variety of grant and loan assistance that may be available to your business depending on its size, location or some other metric. For instance, TechTown in Detroit is providing grants to Detroit-based businesses with 10 or fewer employees through its Detroit Small Business Stabilization Fund. See link to program information: https://techtowndetroit.org/covid-19-updates/
The Michigan Economic Development Corporation (MEDC) is also working to support businesses, with targeted funding of $20 million for grants and loans approved by the Michigan Strategic Fund. You can find the MEDC webpage devoted to Covid-19 support here: https://www.michiganbusiness.org/covid19/
To further assist Michigan businesses, Governor Whitmer made a statewide disaster declaration, which was approved by the U.S. Small Business Administration (SBA) on March 19, 2020. This declaration created the opportunity for businesses in the state that have been financially affected by the Covid-19 pandemic to access the SBA Emergency Disaster Loan Program. Businesses that can show an economic injury due to COVID-19 may qualify for Economic Disaster Injury Loans of up to $2 million at 3.75% (nonprofits can also apply, and their rate is 2.5%) with a payment period of 30 years.
The application itself is a short two pages, but you will need to also submit additional financial information, so it is wise to gather the following materials in preparation for applying:
last 3 years of tax returns (or as many as your business has filed if it has not yet filed three years’ worth of returns);
Sign a Tax Information Authorization (IRS Form 8821) allowing the IRS to release your tax information to the SBA: https://www.irs.gov/pub/irs-pdf/f8821.pdf;
Current balance sheet, profit and loss statement, and schedule of liabilities for the business (within last 90 days);
For each owner with a 20% or more interest in the company (and each general partner), a current personal financial statement (within the last 90 days); a complete copy of their most recent tax return, and a signed IRS Form 8821;
A complete copy, including all schedules, of the latest tax return for each affiliate (that is, business parent, subsidiary or other businesses with common ownership or management). Each affiliate must also provide a Form 8821.
Your insurance information if it covers all or a part of your loss (regardless of the current status of your claim).
Submit SBA Form 1368: https://www.sba.gov/sites/default/files/forms/serv_da_all_loanapp_5_0.pdf
While you can file online at the SBA’s website: https://disasterloan.sba.gov/ela/Information/Index, a hard copy of the application that you can review in preparation (or if you prefer to file by mail) can be found at this link: https://www.sba.gov/sites/default/files/Disaster%20Business%20Loan%20Application.pdf
Stay Safe and Be Well.
