November 2020 - InsureYourCompany

The EIDL (Economic Injury Disaster Loan) provides economic relief to small businesses and non-profit organizations that are currently experiencing a temporary loss of revenue.

Small businesses throughout the US are facing unparalleled economic interruptions due to the COVID-19 pandemic. Substantial economic injury means the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses.

Under the SBA’s EIDL program, small business owners that include non-profits and agricultural businesses, are eligible to apply for an Economic Injury Disaster Loan. This program provides economic relief to businesses currently experiencing short-term financial losses due to the Coronavirus (COVID-19) pandemic as well as those small businesses, small agricultural cooperatives and most private non-profit organizations located in a declared disaster area.

EIDL assistance is available only to those small businesses that the SBA determines are not capable of obtaining credit otherwise. A business may qualify for both a physical disaster loan and an EIDL—the maximum aggregate loan amount cannot exceed $2 million. A separate SBA Disaster Assistance program known as Business Physical Disaster Loans covers property damage.

SBA is currently accepting new Economic Injury Disaster Loan (EIDL) applications from all qualified small businesses.

Who Qualifies:

ELIGIBLE ENTITY VERIFICATION

Businesses with 500 or fewer employees
An agricultural enterprise with 500 or fewer employees
A sole proprietorship, with or without employees, or as an independent contractor.
A cooperative with 500 or fewer employees.
An ESOP (Employee Stock Ownership Plan), as defined in 15 U.S.C. 632, with 500 or fewer employees
A tribal small business concern, as described in 15 U.S.C. 657a(b)(2)(C), with 500 or fewer employees
A business, that is small under SBA Size Standards as defined at https://www.sba.gov/size-standards, including an agricultural cooperative, aquaculture enterprise, nursery, or producer cooperative (excluding all other agricultural enterprises), with more than 500 employees
A business with more than 500 employees that is small as defined by the SBA Size Standards found at https://www.sba.gov/size-standards.
A private non-profit organization that has been granted tax exemption by the IRS under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, is a non-profit organized or doing business under State law, or a faith-based organization.

Loan Use and Amounts:

EIDLs are designed to provide working capital to small businesses until normal operations are resumed. The SBA can help meet financial obligations and operating expenses by providing up to $2 million. Your actual economic injury and your company’s financial needs determine the loan amount for which you may qualify. Proceeds may be used to pay rent, fixed debt payments, the continuation of health care benefits, utilities, and other operational expenses.

Eligibility and Terms

Repayment terms are determined by your ability to repay the loan.

3.75% for businesses (fixed)
2.75% for nonprofits (fixed)
30 years
Payments are deferred for one year
No prepayment penalties or fees
Not forgivable
Collateral is required for loans over $25,000
SBA uses a UCC (general security agreement) that designates business assets as collateral, e.g., furniture and fixtures, machinery and equipment, etc.
Real estate is the preferred collateral.
Loans of $200,000 or less do not require the business owner to put their primary residence up as collateral provided there are other assets that are greater than or equal to the loan amount.

To apply, go to Loan Application. A completed loan application and IRS Form 4506-T giving the IRS permission to provide your tax return information to the SBA must be submitted as well. Please contact the SBA disaster assistance customer service center for additional information. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail disastercustomerservice@sba.gov.

While the SBA provides disaster relief during such crises as the COVID19 pandemic, InsureYourCompany.com can help you ensure that you secure proper insurance coverage for other types of disasters, including physical damage to property, damage to other people’s property, loss of revenue and much more. We can help you secure policies structured to your needs with affordable premiums to fit most budgets. Contact InsureYourCompany.com today to see how we can help.

The restaurant industry anticipates a loss of $275 billion dollars, and 7 million jobs due to the Covid-19 pandemic. Consequently, the National Restaurant Association requested relief on behalf of restaurants and their employees, noting that many restaurants may not resume service if the federal government does not take immediate action.

The association gave recommendations to President Trump and congressional leaders offering solutions on how the industry can be aided to weather the Covid-19 storm, including:

Government-backed Insurance

A standout among the many ideas given by the National Restaurant Association was the $100 billion federal-backed business interruption insurance plan. The plan is meant to help sustain the restaurant business and employees.

According to NRA, most restaurants have the business interruption insurance, but the insurers may fail to compensate businesses because the policies typically exclude losses due to a pandemic or virus. Insurance carriers have objected to such proposals citing the astronomical cost and resulting impact on premiums.

Under the proposal, the federal government, not private insurance carriers would be tasked with creating a framework for restaurants to obtain insurance relief funds.

Federal Loan Program

Another proposal was the establishment of a federal loan program. According to the association, a federal loan program would help restaurants manage the expenses of their business during the pandemic.

The association recommended that affordable federal and conventional loans to be made available to the tune of $45 billion. In addition to that, the NRA requested $130 million for disaster unemployment assistance. The funds are meant to help the restaurants recover lost revenue, make payments on existing debt, pay employees, and keep operations running.

Targeted Relief Funds

The association requested for $145 billion from the Department of Treasury to immediately make up for the massive drop in revenue over the past several months.

In addition, they asked for $35 billion to help communities in particularly hard-hit areas that are unlikely to fully recover. The association also sought help to allow businesses to defer their mortgage, lease, and loan terms.

Tax Measures

The NRA also proposed measures enabling the deferral, delay, and forgiveness of tax obligations.

Tax credits for retaining employees, payroll tax cuts and refund expediting were proposed to help support cash-strapped restaurants.

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