SBA Disaster Loans

SBA Disaster Assistance in Response to the Coronavirus

The U.S. Small Business Administration is offering designated states (including Kansas) and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).

Click here to learn more and apply for assistance

The CARES Act was signed into law on March 27, 2020. The Act provides for special provisions for the Economic Injury Disaster Loan (EIDL), and authorized the Paycheck Protection Program. Both offered through the Small Business Administration (SBA). The loans are available for qualified small businesses, typically less than 500 employees, and most private nonprofit organizations.

Economic Injury Disaster Loan (EIDL)

Loans provide up to $2 million, interest rate not to exceed 3.75%, and a maximum term of 30 years. Loans over $200,000 must be guaranteed by any owner with a 20% or greater ownership. For purposes of this loan the business must have been in operation prior to January 31, 2020.

Businesses that apply for an EIDL are eligible to receive an Emergency Grant of not more than $10,000, and the business shall not be required to repay any amounts of an advance, even if subsequently denied the EIDL. These funds maybe used to address any allowable purpose for a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2), including:

• providing paid sick leave to employees unable to work due to the direct effect of the COVID–19;
• maintaining payroll to retain employees during business disruptions or substantial slowdowns;
• meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains;
• making rent or mortgage payments; and
• repaying obligations that cannot be met due to revenue losses.

How to Apply:
You can apply online for an SBA disaster assistance loan by going to the following section of the SBA website:

You must submit the completed loan application and a signed and dated IRS Form 4506-T giving permission for the IRS to provide SBA your tax return information.

Paycheck Protection Program

Loans provide up to $10 million, interest rate not to exceed 4%, and maximum term of 10 years. The loan is to be used to pay for payroll costs, health care costs, payments of interest on any mortgage obligation, rent, utilities and interest on any other debt obligations that were incurred before the covered period. This loan includes loan forgiveness provisions.

Loan Forgiveness:
The loan forgiveness will equal the amount spent by the borrower in the eight-week period after the loan origination date on the following items:
• Payroll costs
• Any payment of interest on any covered mortgage obligation
• Any payment on any covered rent obligation
• Any covered utility payment

The loan forgiveness shall be reduced by the amount of any reduction in total salary or wages that is in excess of 25% of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period. For these purposes, only employees who did not receive, during any single pay period during 2019, wages or salary at an annualized rate of pay over $100,000 are included.

Paycheck Protection Program Flexibility Act (PPPFA) Today (June 5th) President Trump signed into law the Paycheck Protection Program Flexibility Act (PPPFA)

Following are the highlights and a link to a Forbes article with more details:

  1. Changes amount of loan needed for payroll from 75% to 60%
  2. Extends time period to use funds from 8 to 24 weeks
  3. Pushes back a June 30 deadline to rehire workers to December 31, 2020
  4. Eases rehire requirements
  5. Extends the repayment term from 2 years to 5 years

Forbes article on PPPFA