Understanding Small Business Loans for COVID-19

A brief summary and resources so that you can better understand how to apply for Small Business Loans under the COVID-19 federally declared disaster.

Understanding Small Business Loans for COVID-19

Disclaimer: I do not work for the SBA nor am I in the financial services field. The business owner I work for asked me to research the small business loans the federal government was offering and I thought there might be a lot more people out there who need the information. This is based on my understanding of the information found at sba.gov. Please talk with your local SBA or SBA lender representative to confirm details and process.

What are these Small Business Loans?

There are two small business loans you can apply for: The Paycheck Protection Program and Economic Injury Disaster Loan (EIDL).

You can also apply for an advance on the EIDL through either the Economic Injury Disaster Loan Emergency Advance or Express Bridge Loan Pilot Program.

And then there’s SBA Debt Relief, which we’ll discuss toward the end.

Paycheck Protection Program (PPP)

This is a loan to help you keep your workers employed and paid, whether they work throughout this time or not. It has a maturity of two years with a 1% interest rate.

The SBA states the PPP loans will be forgiven if all employees are kept on the payroll for eight weeks and at least 75% of the money is used for payroll. The other 25% can potentially be used for rent, mortgage, interest, or utilities. You also have to maintain salary levels and employee headcount. If you don’t you run the risk of the forgiveness being reduced or declined.

If you’re not eligible for forgiveness, or only receive partial forgiveness, the loan payments will be deferred for six months.

Economic Injury Disaster Loan

This is the typical loan used when other natural disasters, such as hurricanes and floods.


It’s not stated if you can apply for both of these advances or just one.

Economic Injury Disaster Loan Emergency Advance

You can request an advance on your small business loan of up to $10,000 when you apply for the Economic Injury Disaster Loan. The sba.gov site states that this “advance will not have to be repaid.”

Express Bridge Loan Pilot Program

You can request a fast advance of up to $25,000 when you apply for the Economic Injury Disaster Loan. This advance will be repaid in full or in part by proceeds from the EIDL loan.

You’re only eligible if you have a current business relationship with an SBA Express Lender. I couldn’t find a list of these but did Google the names of a specific bank and credit union along with ‘sba express lender’ and both noted on their websites that they are sba lenders and can handle advances.

SBA Debt Relief

According to the sba.gov website, “the SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.”

Translation: You shouldn’t have to pay back either of the small business loans described above if the loan is issued to you before September 27, 2020. That word issue is important. It doesn’t mean you can apply on September 26th and get debt relief. It means you have to receive the funds (or maybe at least have a confirmed and signed contract) before then, so get on it well before the deadline.

I’ve heard people talking about deferrals and wondering if they’re eligible. My understanding is that deferrals only pertain to people who had disaster loans prior to 3/1/20 (for other disasters.)

Am I Eligible for Small Business Loans?

Small business owners in all US states and territories are eligible to apply for these loans.

Paycheck Protection Program

Do you own a business that has less than 500 employees? Then you’re probably eligible. The following comes straight from sba.gov’s Paycheck Protection Program’s eligibility section:

  • Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
    • 500 employees, or
    • That meets the SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Sole proprietors, independent contractors, and self-employed persons

You might still have some eligibility if you have more than 500 employees, but you’ll need to wade through the Affiliation Rules to get a better understanding. If you have a NAIC code of 72 (Accommodation and Food Services), then those affiliation rules are waived.

If you’re unsure, contact a SBA representative.

Economic Injury Disaster Loan

I didn’t find any specific rules for Economic Injury Disaster Loan eligibility. I would guess that the rules are like those for the Paycheck Protection Program.

How Do I Apply for Small Business Loans?

You can apply for the PPP through any existing SBA 7(a) lender or through any federally insured depository institution or credit union. Here’s a copy of the application so you can be sure to have all your information ready when you talk with them. It’s possible they’ll have you complete it and email it to them or e-sign since going into an office isn’t advised these days.

The EIDL application can be completed online. It wasn’t clear if you submit it online, then talk to a local representative if you need an advance or if you should just print it out and get it to your representative directly. Either way, I suggest asking your representative what they need when you call for an appointment. If anyone goes through the process of requesting an advance, please let us know in the comments.

Compassion and Patience

You’re super-stressed. I get it. As you go through this process, try to keep in mind that there are countless numbers of other people in your exact same shoes. The people at the banks and SBA are overwhelmed but doing their best to help you and everyone else get their loans as fast as possible. They’re human, frustrated with the red tape, and likely are afraid for themselves or family members. Thank them and tell them you appreciate their help.

Maintain Calm (or Find It)

Here are some ways to find your calm during these crazy, stressful days.

  • Do some box breathing
  • Yoga, Qi Gong, Tai Chi
  • Go for a walk (maintaining social distance)
  • Draw, paint, sketch. There are tons of apps for doodling, painting by numbers, etc.
  • Listen to music, Sing at the top of your lungs
  • Dance!
  • Laugh! Seriously, just start laughing and you will laugh harder.
  • The list goes on. Check out my Instagram @goodjuju9 for self-care tips and resources.


UPDATE: I just heard about a non-profit resource called SCORE. They offer free mentorship and education for small businesses and have a special section for the COVID-19 impact.

My only source for this article was sba.gov. The following are specific pages within their site that provide more details about the loans, advances, and debt relief.

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