As of Friday evening, March 20th, both Minnesota and Wisconsin small businesses are eligible to receive Economic Impact Disaster Loans (EIDL) from the SBA.

Applications for these funds are being done directly through the SBA, and not through individual banks.  While Platinum Bank has no control over the timing, decision, terms, etc., we will be here for our small business clients to assist with the application or to answer any other questions during the application process.

Eligibility

The applicant must be a small business or non-profit that has been directly impacted by the Coronavirus outbreak.  The business and its owners must have satisfactory credit and must be able to demonstrate the ability to repay the loan based on normalized operations.

The small business applicant does not need to be a current SBA borrower in order to apply.  The funding is open to all eligible small businesses.

Religious organizations, casinos, racetracks or other gambling facilities, or charitable organizations which would not be eligible for other forms of SBA financing are also not eligible for SBA disaster loans.

Terms

  • Loans are available up to $2,000,000
  • Interest Rate of 3.75% for small businesses, and 2.75% for non-profits
  • No fees for application or for the loan. Fees limited to any required fees for collateral perfection
  • Payments are deferred for the first 11 months. First payment is due 12 months from the Note date
  • Loan term of up to 30 years.

Collateral

For loans up to $25,000, there is no collateral requirement.  For loans over $25,000, the SBA will take the available collateral, including the company’s fixed assets, and personal real estate of owners/guarantors, in the best available position.

Personal guarantees will be required of 20% or more owners.

Use of Proceeds

The proceeds must be used to keep the business operating through the disaster period.  This includes paying payroll, making rent and debt payments, paying vendors, etc.

The goal of the program is to provide the necessary working capital for the business to pay expenses that would otherwise be paid through business operations had the disaster not occurred.

Timing

SBA estimates that the total time needed is about 21 days, assuming a complete application package, under normal circumstances.  However, due to the anticipated increase in volume over the next weeks and months, that time estimate has been increased to 45 days.

SBA stated that they are committed to streamlining the process as much as possible, and will be increasing staffing in the Disaster Loans area in hopes of speeding up the process.

Application

This is a direct loan from the Small Business Administration, and the application is made directly to the Small Business Administration.  Small businesses can apply at https://disasterloan.sba.gov.  The application is made online, and must also include the following forms/documents:

  • SBA Form 5 (legal entity applicant) or 5C (sole proprietor applicant)
  • SBA Form 4506T for applicant, guarantors, and affiliates
  • SBA Form 2202 (schedule of liabilities)
  • SBA Form 1368 (monthly sales history)
  • SBA Form 413 (personal financial statement) for all 20% or more owners
  • Current financial information, including most recent Business Tax Return, most recent fiscal year end financials, current financial statements (within 90 days), and most recent Personal Tax Return of all 20% or more owners.

Information and tips on filling out the SBA application can be found here.

The Platinum Bank team stands ready to answer any questions and to provide assistance with this and other needs your business may have.  Contact information for our entire business banking team can be found at www.platinumbankmn.com