North Carolina small businesses and nonprofits are now eligible to apply for the SBA’s Economic Injury Disaster Loan program. The working capital loans of up to $2 million can provide vital economic support to small businesses and nonprofits to help overcome the temporary loss of revenue they are experiencing due to the COVID-19 pandemic.

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Today’s host is Brent Christiansen, the Chamber’s President and CEO.

0:33 - Brent kicks off the discussion with a few housekeeping items, updates that business owners need to be aware of in the changing world of COVID-19, and what community resources are available. We’ll dive more into the SBA Loans that have recently been made available and what that means for small business owners. 

3:34 - Today’s guests are from the Small Business Association. We’re joined by Levi Kinnard, Economic Development Specialist from the NC District Office, as well as Bob Weston and Victor Dau, Director and Assistant Director of the Piedmont Triad Region for the Small Business Technology Development Center.

4:39 - Brent asks Levi to walk us through what the new SBA Loans are, how to apply for a loan, and other important information that business owners should know about receiving assistance. Levi explains more details about the Economic Injury Disaster Loan, which is now available because of the Governor’s declaration of a state of emergency. 

7:19 - Brent asks about which businesses and organizations can qualify for this loan. Levi explains how the disaster loan program is operating differently in this situation, as there is no physical damage from COVID-19, like what we would see after a hurricane. In this case, small businesses and non-profits are now eligible to receive these loans, and he explains how some of the loan guidelines have been relaxed due to the unconventional nature of the COVID-19 crisis. If you need help putting together your disaster loan application, Levi lists many resource groups in Greensboro who are available to help. 

11:34 - Brent asks about the calculation involved in the loan process based on a business’s ability to pay. Levi explains that the SBA loans are working capital loans, which takes into consideration pre-crisis revenues and operating costs. Based on that, assessors will look at your ability to repay the loan once business is restored. However, deferment periods are being built into the loan to protect the longevity and sustainability of business operations.

13:04 - Are there any regulations and tracking methods about how the loan funds can be used? Levi explains that there are guidelines, but the loans are intended to help with operating costs - bill payments, fixed debts, payroll, accounts payable - but are not intended to replace lost sales or allow businesses to expand.

14:17 - Brent inquires about which, if any, industries are excluded from applying for these loans? Levi lists that agricultural enterprises (who rely on the USDA), religious and charitable organizations, small businesses that make ⅓ or more revenue from gambling profits, casinos and racetracks are barred from applying for this loan.  

15:54 - Some questions from the online group chat are based around what would be considered collateral for these types of loans. Levi explains that there is a collateral requirement for any loans over $25,000 and while personal or business collateral can be put up, real estate is preferred. 

17:13 - Brent reads another question from the chat asking if business owners should wait and see the financial impact in a few weeks, or apply for the loan sooner? Levi recommends applying sooner (especially if you’ve already seen an impact) and get approved for as much funding as possible. This is because it is easier to be approved for more funding now and not spend it all, rather than ask for multiple loans throughout the crisis.  

18:51 - A question from a young business: If your business is less than a year old and doesn’t have the year-over-year revenues to determine need, how are those loan applications handled? Levi explains what documentation is needed if your business is newly established, and that the Office of Disaster Assistance can make a credit decision based on all the information that is given to them.

20:39 - Brent asks for the loans up to (but not over) $25,000, what are the terms and negotiating items that businesses should be prepared for? In these cases, there is no collateral requirement, and you can negotiate with the Office of Disaster Assistance on the repayment terms of the loan to reduce the monthly cost up to 30 years. 

21:57 - Levi offers clarification about what defines a “small business” and which organizations would qualify for these new SBA loans. Levi recommends finding out your NAICS classification code.

24:08 - Brent brings on Bob Weston, who details the wide range of services the SBTDC offers ordinarily to help businesses, and then speaks specifically what the organization can do now to help small businesses with their loan applications and make the process as easy as possible. Bob reiterates Levi’s recommendation to go ahead and apply for these loans, use the checklist and reference the paper application before submitting the electronic application. 

30:17 - Brent reads another question from chat, asking how long it will take for funds to be dispersed. Levi explains that the normal processing time for an application is 8 to 21 days, but one of the biggest hindrances to getting funds is that business owners do not check the message center that loan officers communicate through. Levi recommends frequently checking the loan message center for any updates. Once the loan is processed and approved, there is usually a 5 day distribution period. 

34:34 - Brent asks what the difference is between an SBA 504 loan and these new disaster loans. Bob explains the details of typical SBA loans, and how the disaster relief loans are different. Levi adds that there is no cost to apply for a disaster loan and no obligation to take the loan if it is offered.

37:44 - For business owners with branches in several locations, the recommendation is to apply for a loan for the main business location. Corporate structure decides whether you apply for one or two loans; if both companies originate from the same corporate entity, then you would apply for one loan. For questions specific to your business situation, be sure to contact an SBTDC Counselor. 

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Learn more about the NC Small Business Association.

Get connected: 336-256-9300

Schedule a virtual or phone appointment with an SBTDC Counselor.

Go to the Office of Disaster Assistance and apply for the Economic Injury Disaster Loan.

disasterloan.sba.gov/ela/account/login

Also reference the Coronavirus Small Business Guidance and Loan Resources page.

Want to help the community by donating blood? Check out OneBlood, the main supplier for Cone Health, to find out how and where you can donate blood.

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