As discussed last week in our article entitled “SBA’s Economic Injury Disaster Loans in Response to COVID-19,” on March 17, 2020 Texas Governor, Greg Abbot, requested an Economic Injury Disaster Declaration from the U.S. Small Business Administration (“SBA”) which would allow Texas businesses to access the SBA’s Economic Injury Disaster Loans (“EIDLs”). EIDLs are aimed at assisting small businesses who are suffering substantial economic injury as a result of the Coronavirus (COVID-19) in the form of long-term, low-interest loans to qualifying businesses across the country. Governor Abbott recently declared his Economic Injury Disaster Declaration request was granted by the SBA, thereby, permitting all eligible Texas small businesses to apply for the SBA’s EIDL program. Governor Abbot announced:
Small businesses are the foundation of our state’s economy and they need all the help they can get as the ripple effects of COVID-19 impact their everyday operations. [The] decision by the U.S. Small Business Administration to make Economic Injury Disaster Loans available to qualifying small businesses across Texas is a vital lifeline for Texas small business owners who are doing their best to adapt to these trying times.
The SBA’s EIDLs offer loans up to $2 million to provide economic support to small businesses to combat the temporary loss of revenue they are currently experiencing as a result of COVID-19. EIDLs can be used by Texas small businesses to pay for various operating expenses including trade payables, payroll, fixed debts, and other expenses that businesses may be struggling to pay due to the effects of COVID-19.
EIDLs will carry an interest rate of 3.75% for small businesses and 2.75% for non-profit organizations and contain long-term repayment schedules in an effort to keep payments affordable with maximum terms of up to 30 years. The exact loan terms are determined on a case-by-case basis, based upon each borrower’s ability to repay once the business is stabilized. As noted in our article last week, businesses and non-profit organizations with credit available elsewhere are not eligible for EIDLs. In a conference call with Texas SBA officials today, the SBA made it clear that the meaning of having “credit available elsewhere” is not a test with an exact definition set in stone, but rather is evaluated on a case by case basis. Businesses who are not sure if they will have sufficient resources to weather the COVID-19 storm are encouraged to apply.
Eligible Texas small businesses can apply for an EIDL directly with the SBA by visiting https://disasterloan.sba.gov/ela/ which links to the SBA’s website to apply for assistance directly. For additional information, Texas business owners can contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or by e-mail to [email protected]. The SBA has been made aware of fraudsters who are attempting to take advantage of small businesses during this unprecedented time of need by claiming they are able (or in some cases required) to apply for an EIDL on behalf of the small business, for a fee, of course. The SBA has made it abundantly clear to businesses that any such efforts to require small businesses to pay a fee to apply for an EIDL are improper and possibly fraudulent and should be reported.
The early feedback we have been receiving from SBA officials and some small businesses is that the system is, understandably, being heavily visited during peak use times of 7:00 am CST to 7:00 pm CST, so business owners are encouraged to visit the above website during off peak hours when possible. While SBA officials have assured us that they are processing applications as quickly as possible, as of the drafting of this update, the SBA is targeting a completion time from completed application to distribution of funds of approximately four (4) weeks. While the SBA representative we spoke with has indicated the SBA would like to cut down the turnaround time as much as possible, he acknowledged that the SBA’s resources are being challenged in unprecedented ways by COVID-19 and compared what the SBA is currently facing to the disaster relief requests they would receive if every county and parish in every state in the U.S. was hit with hurricane level devastation all at the same time. The same SBA representative advised that people have reported problems with the website when they attempted to complete the application using the Google Chrome web browser and advised instead using the latest version of Internet Explorer or Google’s Edge web browsers, when possible.
The Strong Firm P.C. is working around the clock to keep our clients apprised of the latest news as it relates to small and midsize businesses with topics ranging from SBA loans, as discussed herein, to employment law, estate planning, real estate, oil, gas and energy, and all other business matters, as impacted by COVID-19. We are committed to do so until our clients and community have made it through this enormous challenge that has impacted our local community, our nation, and the world.
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