COLUMBUS -- Much-needed financial relief may soon be available to Ohio’s small businesses and non-profits.
On Thursday, the U.S. Small Business Administration accepted Ohio’s application for a COVID-19 Disaster Declaration. This allows small businesses and non-profit organizations in Ohio to apply for Economic Injury Disaster Loans (EIDL).
In order to secure a loan, companies must also show they have suffered substantial economic injury due to COVID-19, whether that be due to lost sales or projects that were cancelled.
Barrett Thomas, director of economic development for the Richland Area Chamber, said the SBA will want an idea of how a company’s normal monthly sales compare to their projections for the next six months.
“The loans are essentially cash-flow loans, they’re designed to pay for regular expenses that a company runs into when a disaster interrupts business," Thomas said. “They’re going to be super useful."
According to the Small Business Administration’s website, the loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the impact of COVID-19. The interest rate is 3.75 percent for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75 percent.
Loan amounts may be up to $2 million per business, but the maximum unsecured loan amount is $25,000. There is no fee to apply for the loan and no obligation to accept the loan if it is granted.
Credit will also be a factor in the application process.
“I’ve been told the main factor in the EIDL decision process will be the ability to repay the loan. This is not grant money and the government needs to be repaid,” Jodie Perry, president of the Richland Area Chamber, wrote in an email.
Both Thomas and Perry recommended businesses apply as soon as possible at the SBA’s website, then be prepared to wait. Thomas said that loan applications will likely take between four and five weeks to process.
“The only direct lending that the SBA does is this disaster program, so they don’t have a lot of capacity in this area,” Perry explained.
“Additionally, they’ve never had a disaster that impacts the entire country, and nearly every business. They will be inundated with applications. They are looking for internal process changes that will make for a more automatic process, but that is still forthcoming.”
Applicants may call the SBA’s Customer Service Center at 1-800-659-2955 or email firstname.lastname@example.org if they have questions. Individuals who are deaf or hard of hearing may call 1-800-877-8339.
For small business owners who need a loan or simply a little financial advice, local banks can also be a valuable resource.
“We’re quite busy and actively listening and finding ways we can help those in need,” said Chris Hiner, president of Richland Bank. “A lot of different businesses are facing uncertainty about how long this is going to go on and the ripple effect, so we’re trying to accomodate the best we can.”
Open communication between bankers and businesses is crucial in finding the best financial solutions.
“Keep talking to your banker asking them questions, letting them know what you’re struggling with,” said Mark Masters, president of Mechanics Bank.
“We certainly would want our borrowers to be communicating with us and letting us know what their specific challenges are so we can structure, or in some cases restructure, their loans to help with the current set of circumstances.”