By Alex Mancero, Christopher Harrington, and Ryan Christ
The United States Small Business Administration (the SBA) declared the State of Colorado eligible for disaster loan assistance. Economic Injury Disaster Loans (EIDLs) up to $2,000,000 will be working capital loans to help small businesses and private, nonprofit organizations meet their ordinary and necessary financial obligations such as outstanding debts, payroll, and other bills that cannot be met as a direct result of the disaster.
To be eligible, applicants must:
- Have a credit history acceptable to the SBA.
- Show the ability to repay the loan.
- Provide collateral for loans over $25,000. (The SBA will not decline for lack of collateral, but the borrower must pledge collateral that is available.)
Small businesses that have access to credit may not be eligible. Small businesses with no credit qualify for an interest rate of 3.75 percent, and nonprofits qualify for an interest rate of 2.75 percent. The maximum interest rate for the loans is 4 percent for a term of up to 30 years. EIDLs cannot be used to refinance long-term debt.
Applications, due by December 17, 2020, may be made online at https://disasterloan.sba.gov/ela. Local assistance is available at the Denver Metro Small Business Development Center and through your attorneys at Sherman & Howard L.L.C.
Our Corporate & Transactional Group is monitoring the COVID-19 situation closely and is available to discuss any concerns employers may have.