Michael Bowers, Director of the Ohio Small Business Development Center at Columbus State Community College, shared the following update with Ohio business owners recently regarding the SBA Economic Disaster Loan program and the CARES Act passed days ago by the U.S. Congress
I wanted to update you on some of the changes to the SBA Economic Disaster Loan program and new programs created by the Coronavirus Aid, Relief and Economic Security Act (CARES Act) recently passed by Congress and signed by the President. This legislation has brought $2.2 trillion to the economy to support individuals and small businesses impacted by the COVID-19 pandemic. We at the Ohio Small Business Development Center are here to assist small business owners to take advantage of the programs best suited to make a positive impact on their businesses.
Here are three major loan/grant programs created in the legislation designed for small businesses :
Economic Injury Disaster Loans: The
Economic Injury Disaster Loan is a low-interest, fixed-rate loan,
with extended terms, purposed to offset a lack of working capital for
small businesses. This would be used to pay for operational costs such
as rent, utilities, and payroll based on lost revenue directly related
to the COVID-19 outbreak. Unsecured loans are
available up to $25,000. Loans over that amount will require collateral
with real estate preferred. The loans feature a reduced interest rate
of 3.75% on loans to for-profit businesses and 2.75% to private,
non-profit businesses. Payments are deferred for
11 months which means there are no payments due for a year. More
information and the application portal is at https://covid19relief.sba.gov/#/.
Emergency Economic Injury Grants:
These
grants provide an emergency advance of up to $10,000 to small
businesses applying for the Economic Injury Disaster Loans. Business
owners can access these grants by applying for the
Economic Injury Disaster Loan and request the advance on the
application. $10,000 will be made available to you within three (3) days
of your completed application. This advance is a grant and does not
need to be repaid, however it will be deducted from the
approved loan amount. These funds can be used to keep employees on
payroll, pay for sick leave, pay business obligations or other impacted
operational issues created by the COVID-19 outbreak.
Paycheck Protection Program (PPP) Loans: This
program provides cash-flow assistance through 100 percent
federally guaranteed loans to employers who maintain heir payroll
during this emergency. If employers maintain their payroll a portion of
the loan will be forgiven, which would help workers remain employed.
Loan amounts will be determined by SBA guidelines
for the loan and will be based on calculations using qualifying
expenses for the period from February 15, 2020 – June 30, 2020.
Note, entrepreneurs will go to your bank to apply for these loans rather than applying directly to the SBA.
Specific features of these loans include:
- Forgiveness of a portion of the loan equal to 8 weeks of payroll
- Interest rate on the portion of the loan not forgiven is .5% with a maximum term of 2 years
- No SBA fees, zero prepayment fees
- At least six months of payment deferral
- Loans
can be used for payroll and payroll related costs; continuation of
health care benefits; payments of interest on mortgages; rent;
Utilities; and interest on debt
obligations incurred prior to the period
There are a lot of moving parts relating to support available for small businesses and in some cases misinformation. We at the SBDC are specifically trained in these products and are fully staffed and ready to assist business owners, at “no cost” during these challenging times. Please feel free to reach out to me at Ohio SBDC at Columbus State for any support by calling 614-287-5509 or email mbowers3@cscc.edu.
Thank
you for all you do to support small business ownership. We can all come
through this stronger and wiser by working together and supporting each
other.
Stay safe!
Michael Bowers ǀ Director
Ohio Small Business Development Center
COLUMBUS STATE COMMUNITY COLLEGE
550 East Spring Street, Columbus, OH 43215
(614) 287-5509 | mbowers3@cscc.edu
