Corona Virus Outbreak: How To Apply For An SBA Disaster Loan - News-Credit-Mortgage-Coin

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Monday, March 23, 2020

Corona Virus Outbreak: How To Apply For An SBA Disaster Loan

If your company is affected by the coronavirus crisis, you can qualify for a catastrophe loan with an attractive interest rate. Here are two options



Summary

Many entrepreneurs look for help during the coronavirus crisis in the Small Business Administration loan programs. Although SBA loans are not relevant for all companies, it is worth looking at them to see if you qualify

Many small businesses are in need due to the recent economic slowdown due to the coronavirus crisis.
Small businesses are the first to feel the shockwaves when a massive event like Coronavirus lock occurs.

"It's an unprecedented situation that we're all dealing with," said Eric Goldschein, editor at Fundera, a small business lending platform.

Many entrepreneurs are looking to ease the small business administration loan programs. Although SBA loans are not relevant for all companies, it is worth looking at them to see if you qualify. SBA-backed loans generally offer very attractive interest rates.

SBA disaster credit support program

Companies of all sizes can request up to $ 2 million in economic damage. The SBA checks your credit and determines your eligibility. As soon as the SBA sends credit completion documents, it will make an initial payout of $ 25,000 for physical damage within five days. According to the SBA, the interest rate must not exceed 4% per year.

Typically, disaster relief focuses on a specific region - for example, when a hurricane occurs - but in this case, many regions are involved. To find out if your region is currently one of them, visit the program website.

"For this situation with COVID-19, entire countries are declared disaster areas," says Goldschein. "We will probably get to the state where each state is declared."

In addition to the forms required for the program, applicants must submit completed copies of the latest federal tax returns for their company, a personal financial report for each client who owns 20% or more of the business, and a list of liabilities with all fixed debts.

Applicants may also need to provide the lender with full copies of the latest federal tax return for each client who owns 20% or more of the business, as well as for any general partner.

If the year-end tax return has not been filed, you may also need to provide a year-end income statement, balance sheet, and current year-end income statement to complete your application.



7 (a) Small Loan Program

There are other SBA loan programs if you can hold out a little longer to get your money.

The 7 (a) Small Business Loan Program, a popular program for small businesses, offers funds of up to $ 350,000 with five to ten business day loan application processing times. The interest rate must not exceed the SBA maximum.

For loans with a term of less than seven years, the maximum prime is 4.25% for loans up to USD 25,000. Prime plus 3.25% for loans from $ 25,001 to $ 50,000; and Prime plus 2.25% for loans over $ 50,000.
For loans with a term of seven years or longer, the maximum amount of SBA Prime is plus 4.75% for loans with a volume of up to USD 25,000. Prime plus 3.75% for loans from $ 25,001 to $ 50,000 and Prime plus 2.75% for loans over $ 50,000.

There is no prepayment penalty. So if you're not sure if you need the money but want to be on the safe side, this may be a good option.

Bottom line
The COVID-19 panic is likely to hit companies of all kinds in the coming months. If your success is based on physical interactions with customers, you may be the most affected. If Americans settle in their homes, an SBA catastrophe loan can hold up your business until everyday life returns to normal.

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