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SBA Loans Explained

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Posted By Linville Team

If you own or operate a small business, the current situation with COVID-19 and its economic effects probably means that you are hearing a lot about SBA loans. While we are not experts on the subject, we have been learning a lot in order to help our clients and community navigate this season. For more detailed information, we suggest speaking with your accountant, but we have provided a brief overview here to help you get started in thinking about whether to pursue an SBA loan.

What is an SBA loan? 

Simply put, an SBA loan is a loan available for small businesses. With everything going on, the term is being used as a shorthand for the Economic Injury Disaster Loan assistance that is being made available by the U.S. Small Business Administration. In essence, these are low-interest federal disaster loans for working capital to small businesses that are suffering substantial economic injury as a result of COVID-19. 

In total, these will offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. 

According to the Small Business Administration, these loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%. The loans have long-term repayments in order to keep payments affordable (up to a maximum of 30 years). Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.

How do I apply for an SBA loan? 

Small businesses, small agricultural cooperatives, and most private non-profits in all U.S. states and territories are currently eligible to apply. In order to qualify, a business must be able to prove that they have suffered substantial economic injury specifically due to coronavirus. This means that as a small business owner, you must show that the present situation has made you unable to pay your ordinary and necessary operating expenses. 

If you believe that you qualify, you can apply for an SBA loan my mail or online here.  It is probably a good idea to gather some of the below information before sitting down to apply. 

Materials to apply: 

  • Employee Identification Number 
  • Date of Establishment 
  • Number of years under current management 
  • Personal information for each of the business owners (DOB, SSN, phone numbers, ownership %, etc.) 
  • Personal financial statements for each owner 
  • Tax Information Authorization
  • Tax Returns
  • Schedule of Liabilities
What else do I need to know? 

After you submit your application the SBA will review your credit and conduct an inspection to verify your loss. If you are approved, a case manager will be assigned to you to make sure you meet all the loan conditions. They will also schedule your fund disbursements. 

If you are granted a loan, the funds can be used for working capital as well as for paying fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales/profits or for expansion. Essentially, the loan is meant to help small businesses weather this storm so we can enjoy their goods and services on the other side of this season! 

If you need funds quickly (i.e. before a SBA loan could be processed, approved, and dispersed), talk to your bank about an SBA Express Disaster Bridge Loan. These have a much faster turn around and could be repaid in full or in part from the SBA loan itself at a later time. 



We know that this is not an exhaustive dive into SBA loans, but we hope that it helps you wrap your mind around the topic. If you are unsure whether this is worth pursuing, contact your broker. They would be happy to help you walk through this and point you to additional resources on the topic. (Haven’t worked with a broker before? Please still feel free to reach out to our office, we would be honored to help you decipher this topic in order to get you out on the other side of this!) 

If you have specific questions on the loans, you can reach out to the SBA disaster assistance customer service center at 1-800-659-2955 or e-mail them at

The present situation is ever-evolving. As new developments arise, we will continue to update our blog as quickly as we can in order to get you the most up-to-date information. 

We wish you good health and calm during this season! We will weather this together.