Gov. Polis Secures Federal Loan Assistance for Colorado’s Small Businesses 

Approval Unlocks Billions in Economic Recovery Loans for Small Businesses Impacted by COVID-19

Colorado small businesses impacted by COVID-19 can seek individual small business loans up to $2M as part of the Small Business Administration’s Economic Injury Disaster Loan program. Small businesses throughout all 64 counties may seek SBA Economic Injury Disaster Loans. Governor Jared Polis announced that Colorado’s application for federal disaster area designation has been approved.

SBA’s Economic Injury Disaster Loan (EIDL) Basics

 What businesses are eligible to apply?

SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses, small agricultural cooperatives, small aquaculture businesses. and most private nonprofit organizations.

 This includes:

  • Businesses directly affected by the disaster
  • Businesses that offer services directly related to the businesses in the declaration
  • Other businesses indirectly related the industry that are likely to be harmed by losses in their community
  • Examples of eligible industries include but are not limited to the following: hotels, recreational facilities, charter boats, manufactures, sports vendors, owners of rental property, restaurants, retailers, souvenir shops, travel agencies, and wholesalers.

Ineligible Entities

  • Agricultural Enterprises -If the primary activity of the business (including its affiliates) is as defined in Section 18(b)(1) of the Small Business Act, neither the business nor its affiliates are eligible for EIDL assistance.
  • Religious Organizations
  • Charitable Organizations
  • Gambling Concerns (Ex: Concerns that derive more than 1/3 of their annual gross revenue from legal gambling activities)
  • Casinos & Racetracks (Ex: Businesses whose purpose for being is gambling (e.g., casinos, racetracks, poker parlors, etc.) are not eligible for EIDL assistance regardless of 1/3 criteria above.

 How much can I borrow?

  • Eligible entities may qualify for loans up to $2 million.
  • The interest rates for this disaster are 3.75 percent for small businesses and 2.75 percent for nonprofit organizations with terms up to 30 years.
  • Eligibility for these working capital loans are based on the size (must be a small business) and type of business and its financial resources.

 How can I use the loan funds?

These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.  The loans are not intended to replace lost sales or profits or for expansion.

What is the criteria for a loan approval?

  • Repayment– SBA must determine that the applicant business has the ability to repay the SBA loan.
  • Eligibility- The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downturn in the economy or other reasons.
  • Credit History- Applicants must have a credit history acceptable to SBA.

 What are the collateral requirements?

  • Economic Injury Disaster Loans over $25,000 require collateral.
  • SBA takes real estate as collateral when it is available.
  • SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.

 What other criteria is involved?

  • The applicant business must have a physical presence in the declared disaster area. An applicant’s economic presence alone in a declared area does not meet this requirement. The physical presence must be tangible and significant.  Merely having a P.O. Box in the disaster area would not qualify as a physical presence.

SBA’s Working Capital Loans are Different from Other SBA Loans

  • SBA’s Economic Injury Disaster Loan (EIDLs) funds come directly from the U.S. Treasury.
  • Applicants do not go through a bank to apply.  Instead apply directly to SBA’s Disaster Assistance Program at: DisasterLoan.sba.gov
  • There is no cost to apply.
  • There is no obligation to take the loan if offered.
  • The maximum unsecured loan amount is $25,000.
  • Applicants can have an existing SBA Disaster Loan and still qualify for an EIDL for this disaster, but the loans cannot be consolidated.

Basic Filing Requirements

  • Completed SBA loan application (SBA Form 5).
  • Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates.
  • Complete copies of the most recent Federal Income Tax Return.
  • Schedule of Liabilities (SBA Form 2202).
  • Personal Financial Statement (SBA Form 413).
  • Other Information may also be requested.

 Other information that may be requested:

  • Complete copy, including all schedules, of the most recent Federal income tax return for principals, general partners or managing member, and affiliates (see filing requirements for more information).
  • If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year.
  • A current year-to-date profit-and-loss statement.
  • Additional Filing Requirements (SBA Form 1368) providing monthly sales figures. (This is especially important for Economic Injury Disaster Loans.)

How to Apply

  • Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website at https://covid19relief.sba.gov/#/ 
  • Paper loan applications can be downloaded from www.sba.gov/disaster.  Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX  76155.
  • Disaster loan information and application forms may also be obtained by calling the SBA’s Customer Service Center at 800-659-2955 or by sending an email to disastercustomerservice@sba.gov.

Filing Requirements (included as attachments)

  • Electronic Loan Application (Form 5)
  • Electronic Loan Application (Form 5C)  Sole Proprietorship Only
  • Tax Authorization (Form 4506-T) 20% Owners/GP/50% Affiliate
  • Most recent Business Tax Return
  • Personal Financial Statement (Form 413) 20% Owners/GP
  • Schedule of Liabilities (Form 2202)

1. ELA0-Business Loan Application (SBA 5)

2. ELA0-Request for Transcript of Tax Return (IRS 4506T)

3. ELA-Request for Transcript of Tax Return (instructions IRS Form 4506T)

4. ELA0-Personal Financial Statement (SBA 912)

5. ELA0-Schedule Of Liabilities (SBA 2202)

6. ELA0-Monthly Sales Figures (SBA 1368)

7. Current Proposed Checklist from SBA Office of Disaster Assistance for EIDL application

9. SBA Economic Injury Disaster Loan-COVID19- How To Complete Online Application

RECOMMENDATIONS:

  • Submit your application as soon as possible.
  • Write your password down, the system is not able to retrieve it.
  • Save your work at every prompt.
  • Recheck the filing requirements to ensure that all the needed information is submitted.
  • The biggest reason for delays in processing is due to missing information.  Make sure to complete all filing requirements before submitting the application and forms.
  • If more funds are needed, applicants can submit supporting documents and a request for an increase.  If less funds are needed, applicants can request a reduction in the loan amount.

If the loan request is denied, the applicant will be given up to six months in which to provide new information and submit a written request for reconsideration.

DISCLAIMER

The Colorado SBDC, West Central SBDC, and Region 10 do not process SBA Economic Injury Disaster Loans, you have to apply directly through the U.S. Small Business Administration.

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