State receives disaster declaration from feds

Small-business loans freed up by SBA act

The U.S. Small Business Administration has approved Colorado’s request for a statewide disaster declaration, a move that will free up billions in emergency loans at low interest rates for small businesses in the state.

“SBA is strongly committed to providing the most effective and customer-focused response possible to assist Colorado small businesses with federal disaster loans. We will be swift in our efforts to help these small businesses recover from the financial impacts of the coronavirus (COVID-19),” said SBA Administrator Jovita Carranza in an announcement Thursday on the Economic Injury Disaster Loan program

Businesses with 500 and fewer employees that can show their business operations have been impacted by the coronavirus outbreak can apply for SBA’s Economic Injury Disaster Loan program. Up to $2 million can be borrowed, although the amount granted will be scaled to the size of the business. The loans are for 30 years and carry a 3.75% interest rate for businesses and 2.75% for nonprofits.

They can be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid if the disaster hadn’t occurred. But they aren’t intended to pay down long-term debt, so no swapping out a higher-rate bank loan out with cheaper government money.

“Many businesses across Colorado are experiencing substantial losses and business disruption as a result of the national response to the recent outbreak and spread of COVID-19,” Congressman Joe Neguse wrote the SBA last week as part of Colorado’s application. “All sectors of the economy are feeling the effects of this pandemic and every available incentive to help businesses and the workers they employ through this uncertain time is critical.”

About 1.1 million people are employed by small businesses in the state, and those businesses are starting to shut down in large numbers in response to federal and

state orders designed to curtail the spread of the virus.

But the Colorado SBDC Network warns that the loans don’t represent a handout open to all comers.

The SBA will do a form of financial triage and extend credit only to firms it believes can survive and repay what they borrow.

Agricultural enterprises, religious and charitable organizations, casinos and companies in the cannabis industry are not eligible for loans. Those with a poor credit crisis gong into the downturn are unlikely to win approval, and the SBA must have confidence that the business will be able to repay the loan.

Applicants may apply online, receive additional disaster assistance information and download applications at https:// disasterloan.sba.gov/ ela. Applicants may also call SBA directly at (800) 659-2955 or email disastercustomerservice@sba.gov for more information.

Here are some of the forms required: a completed SBA loan application, SBA Form 5; a Tax Information Authorization via IRS Form 4506T; copies of the most recent federal income tax returns; a schedule of liabilities, SBA Form 2202; a personal financial statement, SBA Form 413; and income, balance sheet and cash flow statements.

The deadline to apply is Dec. 17.