SBA and Access to Economic Injury Loans

SBA and Access to Economic Injury Loans


On Tuesday, Joseph Amato, District Director for the US Small Business Administration (SBA) shared important information about access to Economic Injury loans through the SBA as a result of the COVID-19 outbreak.
This morning the SBC declared a state of emergency for Nevada which allows for the immediate acceptance of SBA disaster loan applications for Economic Injury. These applications will be processed through the Office of Disaster Assistance (ODA) in Sacramento, CA.
These Economic Injury loans are different from the typical SBA loan as they are being funded directly by the federal government and not through a lender.
The SBA has tried to set up a seamless process for small businesses to apply for financial assistance. You must go to their Economic Injury website to begin the application process.
Small businesses and nonprofit organizations are eligible for an Economic Injury loan of up to $2MM with low interest rates (public companies are not eligible for this program).
For-profit businesses – 3.75% Fixed Rate
Non-profit businesses – 2.75% Fixed Rate
$0 Closing Costs for applications through the website
  • Size standards are still in effect.
  • You must have an explainable credit history (they will consider medical and other life changes).
  • You must have the ability to repay the loan. Please note that these loans can have expanded terms up to 30 years to keep the monthly payments low.
  • SBA will be required to take all available collateral until the loan is repaid.

The website will help you to determine the loan amount you will need based on factors including your monthly burn rate:

  • Current debt obligations including SBA and 3rd party loans
  • Lease/Rent
  • Fixed liabilities including payroll and benefits for critical employees
  • Costs to not only stabilize your operation but prepare you for recovery
  • Individual contractors are also able to apply

Normally the SBA would fund the above for 3-6 months, however it is allowing small businesses to request up to 12 months. The team at the SBA can help you with calculating your costs to determine how large your Economic Injury loan should be. You will also need to share historical income for the past 3 years with the SBA to help them understand your business cycles to further support your loan amount.

If your small business applies for a loan of $25,000 or less, the ODA will be able to streamline the process without requiring documentation – only a signature – to deliver funds as quickly as possible. All other loans are expected to take between 2-3 weeks from application to funding.

If you underestimate the amount of money you need from this Economic Injury program, you are able to go back and reapply for more financial support as long as the total amount does not exceed the $2MM limit.If you overestimate your costs and borrow more money than you need, there is no penalty for early repayment of the Economic Injury loan.

If you currently have a loan through the SBA, this will not affect your loan limit of $5MM. Regular SBA loans and the Economic Injury loans are funded separately from two different sources.

In the remote chance that your small business is not approved, the SBA is working with banking institutions to find other options to fund your operations to keep your doors open.

Deadline to apply is December 17, 2020.

If you have any questions, please call the SBA District Office at 702/388-3611. Please be patient as they are receiving a high volume of calls.

You can also call the Governor’s Office of Economic Development at 702/486-2700.

The Downtown Vegas Alliance hopes that this information is helpful to you and your business during this challenging time. As we learn more, we will be sure to share updates with our members.

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