WASHINGTON — The COVID-19 pandemic can strain a small business’ financial capacity to make payroll, maintain inventory and respond to market fluctuations (both sudden drops and surges in demand), the U.S. Small Business Administration says.
To minimize the economic disruption to small businesses like dry cleaners, SBA Administrator Jovita Carranza recently issued revised criteria for states or territories seeking an economic injury declaration related to COVID-19.
The relaxed criteria will have two immediate impacts, Carranza says: a faster, easier qualification process for states seeking SBA disaster assistance, and expanded, statewide access to SBA disaster assistance loans for small businesses.
The SBA loans are typically only available to small businesses within counties identified as disaster areas by a governor. Under the revised criteria, disaster assistance loans will be available statewide following an economic injury declaration and will apply to current and future disaster assistance declarations related to coronavirus.
“We’re very encouraged that banks and financial institutions are responding to the President’s efforts to mobilize an unprecedented public-private response to the coronavirus (COVID-19) outbreak,” says Carranza. “As a result, most small businesses that need credit during these uncertain times will be able to obtain it.”
SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance for each affected small business. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the pandemic’s impact. The interest rate is 3.75% for small businesses, 2.75% for non-profits.
SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
To learn more about loan availability and steps needed to qualify your garment care operation, visit the SBA website. To find out if there has been a coronavirus disaster declaration made for your state, visit this website.
Some states are also looking into establishing or funding their own small-business relief programs.
For example, the Commonwealth Financing Authority has transferred funding to the Pennsylvania Industrial Development Authority for zero interest loans to small businesses, according to Sen. Joe Scarnati, and over $60 million will be available to that state’s businesses with 100 or fewer full-time employees under the program still being developed.