On March 27, President Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law after swift passage in Congress. The new law establishes significant new resources for businesses that will be available soon from the U.S. Small Business Administration (SBA). The law also contains several tax provisions. The U.S. Senate Committee on Small Business and Entrepreneurship has prepared a Small Business Owner’s Guide to the CARES Act on all of the forthcoming federal resources.
Additionally, all New Jersey counties are now approved for federal disaster assistance, making New Jersey businesses eligible to apply for Economic Injury Disaster Loans (EIDLs). These are working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.
To see whether you might qualify for this program, use the NJ COVID-19 Business Support Eligibility Wizard.
To be eligible for EIDL assistance, New Jersey-based small businesses or private non-profit organizations must have sustained economic injury, as well as being located in a disaster-declared county or contiguous county, which all New Jersey counties currently are.
- Credit History – Applicants must have a credit history acceptable to SBA.
- Repayment – Applicants must show the ability to repay the loan.
- Collateral – Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available.
- SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 3.750 percent.
The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.
Applicants may apply online, receive additional disaster assistance information and download applications at covid19relief.sba.gov.
Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email firstname.lastname@example.org for more information on SBA disaster assistance. Individuals who are deaf or hard-of-hearing may call (800) 877-8339.
Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155
Updated: March 30, 2020
Source: SBA Disaster Assistance in Response to the Coronavirus