SBA Disaster Loans and Your OOH Company

A new SBA disaster relief program has been approved by the Senate and House.  The program provides $349 billion in funding for SBA disaster loans for small businesses.   Here are key terms:

  • The program is open to businesses with fewer than 500 employees, independent contractors and sole proprietors.
  • Loans are made through SBA and Treasury approved lenders.
  • You can borrow 2.5 times your monthly payroll, up to $10 million and use the funds for payroll, rent, utilities and interest on debt.
  • You cannot use the money to compensate any salaries in excess of $100,000 per annum.
  • The loan will be forgiven if the funds are used to pay payroll costs, rent, utility payments and mortgage interest.  The amount of loan forgiveness will be reduced if you lay off employees.  If you re-hire employees laid off as a result of covid-10 you will not be penalized for having a reduced payroll at the beginning of the period.
  • The loans are unsecured and there is no personal guarantee.
  • You will be able to download a form to apply for a disaster assistance loan on the SBA Office of Disaster Assistance Website.

For more details see this OAAA special report and this economic analysis by the Venable law firm. 

Insider’s take: The new disaster assistance loans will have much less red tape and better terms than normal SBA loans. Looks like the funds will be available in days rather than in months.    Talk to your lender to see if they are SBA approved and can make disaster assistance loans.  You also might want to be careful about terminating employees this week, especially if you can get funding to carry them on the payroll for the next 8 weeks via a disaster assistance loan.

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One Comment

  1. Thank you so much for this information Dave!!! What would our industry do without you?