The Collierville Chamber of Commerce is confident that we will get through the current health care crisis if we work together. As our nation and our community struggle with changes in our lives and adapting to new restrictions, we are very aware of the vulnerability of many small businesses.
Now is the time for small business owners to prepare for the future, and your Chamber wants to assist you.
Per recent legislation by Congress, the Small Business Administration is making a Disaster Relief Loan available to almost all small businesses. The Small Business Administration will be lending up to $2 million to businesses at a 3.75% fixed interest rate with a repayment of up to 30 years.
You should begin to familiarize yourself with the forms and the information you will need to expedite assistance in the upcoming weeks and months.
We have attached the downloadable forms in this message, and you will also be able to find the forms on the Collierville Chamber of Commerce’s COVID-19 Resource Center for Disaster Relief.
Here are some important points for you to consider:
- Website to apply for the loan: https://disasterloan.sba.gov/ela/
- This is for working capital. It is not designed for expansion or debt consolidation.
- This loan process will be done by the Small Business Administration. It is not processed through your bank or credit union.
- Definition of Economic Injury by the SBA
Here is what is meant by ECONOMIC INJURY for purposes of any SBA loan to be provided, once the COVID 19 declaration is made for TN:
- “Businesses can only seek assistance for economic injury (not physical damage) as a result of the incident [COVID 19].
- Substantial economic injury occurs when a business concern is unable to meet its obligations as they mature or to pay its ordinary and necessary operating expenses.
- Establishing economic injury is a comparison between the financial information from the period in the prior year to the injury period of the current year – this period must be associated to the [IMPACT OF COVID 19] and cannot be attributed to a downturn in local economy or other unrelated issues.
- For example, if [employees are unable to work; or major conferences cancelled from which the business received revenues; or if a restaurant experiences substantial reduction in customers due to social distancing or because local or state officials are asking or ordering businesses to temporary close or reduce services (e.g., take out only)] and the business [will] not able to be re-established for two months, the business should consider how long it will take for things to normalize.
- If it’s three months, the analysis [for a loan would] show the financial data for the same three months of last year and the anticipated financial data for the same period this year.
The loans are not intended to replace lost sales or profits, rather they are intended to pay fixed debts, payroll, accounts payable, and other expenses that could have been paid had the [IMPACT OF COVID 19] not occurred.
Analyzing a drop-in sales, the length of time the business will be impacted, the type of business and typical business cycle of the industry, provides the SBA [loan officers] with the requisite data needed to determine if the economic injury is considered substantial.
- All Businesses should apply (that are eligible)
- Tennessee has completed the documentation process and we are presently awaiting SBA approval within the next 24-48 hours.
- Loans are set at an interest rate of 3.75% with a maximum term of 30 years.
- First year’s payments will be deferred (tbd)
- Any loan request over $25,000 will require collateral
- It is recommended that the client download the documents first and hand complete all the necessary documents before completing online.
- Filling the application out completely is åkey to successful processing.
- Underwriting will take 2-3 weeks then another 7-10 days for documentation & disbursement – with a FULL & COMPLETE Application.
Important criteria for the loan:
- A complete and accurate loan package
- Submitted electronically (sending in paper doc will slow it down)
- Request as much as you think you might need. Asking for more money after you’ve already applied will be more difficult at a later date.
- They will review cash flow (built into the application)
- Credit requirements will be relaxed.
-In form 5C – be sure to put in an accurate phone number to connect with you.
Any additional questions go to the SBA customer service line at 1-800-659-2955
Future Plans and Resources
In the future, at a time when group meeting restrictions ease, the Collierville Chamber of Commerce will coordinate with the Small Business Administration and the Tennessee Small Business Development Centers to hold a workshop or virtual meeting, to help with the disaster relief process.
We at the Chamber encourage you to begin today to facilitate the process. We are here to help in any way we can.