As many of you are aware, Dakota Business Lending is a non-profit Certified Development Company authorized by SBA, serving businesses and banks throughout North Dakota, Montana, and western Minnesota by offering SBA 504 loans.
The SBA Economic Injury Disaster Loan provides up to $2 million in assistance to help overcome the temporary loss of revenues due to the COVID-19 pandemic. The loans can be used for pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. The program also provides long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
This morning, the SBA released further details on SBA Direct Disaster Loans that will be made available to businesses impacted by the Coronavirus (COVID-19). We wanted to pass this information along to the businesses, lenders, and communities we serve in North Dakota, Montana, and western Minnesota and ask that you forward to all your contacts to assist businesses in your community.
Last night, the SBA announced that they have waived the normal disaster deceleration process, allowing Governors to declare their entire states eligible. As a result, many more states have begun to pop up as eligible on the SBA Disaster website and SBA indicated this morning they expect all states to be eligible by Friday. With that being said, keep in mind that the SBA has never faced a disaster of this magnitude and it will take them some time to get the delivery resources of the program in place. In a typical year they make $1 billion in disaster loans with over 80% of those going to consumers (farmers, consumers after a hurricane). Between 2005 and 2015 SBA handled a total of $4 billion in disaster loans. This disaster loan program is 50 times larger than the typical year at $50 billion. For comparison, the entire SBA 7(a) program made $30 billion in loans last year using the entire network of banks nationally. They are going to be asked to loan almost double the amount of the total volume of SBA 7(a) loans they do in a year in a fraction of the time they normally do.
Below, we have included a detailed webinar slide deck from the SBA that outlines details on he program including eligibility, how to apply, and how to navigate their website. Businesses can also get the latest by monitoring www.sba.gov/disaster. The SBA will continue to provide further guidance as Congress passes further enhancements, delegates further authority, and provides additional resources to them to assist in this crisis.
For more information on the SBA Coronavirus (Covid-19) disaster loan: