H2R CPA Blog

Disaster Relief Loans – Application Process

The ability to access capital and maintain cash flow is essential for all business, especially in these difficult times. The soon to be passed CARES Act has provided for various lending facilities in hopes to allow businesses quicker access to available funds. However, the Act still needs to be passed and then the various government agencies will have to give direction to the private sector on how to implement these programs.

H2R CPA has reached out to our contacts in the banking sector for guidance on what programs are and will soon be available to local businesses. Below is a summary of the programs and the information that is available to date. We encourage you to reach out to any current banking relationship you have, to find out more about these programs. Regardless of the type of loan you have now, these new loans will be administered by banks and not the Federal government, so starting with someone that already knows your business will help expedite the process. If you don’t have a current banking relationship and would like an introduction to someone that might be able to help, please contact your H2R CPA liaison.

SBA Small Business Interruption Loans

Specific application requirements are being worked out, with lenders expecting guidance within 30 days. To start the process in anticipation of application specifics, businesses should provide documents to lenders, including:

  • 3 years of Business Tax Returns
  • Payroll Data
  • Utility Bills or monthly expenditures
  • Rent/Mortgage Expenditures
  • Indebtedness incurred prior to March 1, 2020

All companies in business on March 1, 2020 with 500 or fewer employees are eligible. Loans are guaranteed by the SBA – so no personal guarantees or collateral is needed. The maximum loan is $10 million, with portions forgivable and no prepayment penalties. Borrower shall be eligible for loan forgiveness for an amount equal to the cost of maintaining payroll continuity during the covered period, which is the period beginning on February 15, 2020 and ending on June 30, 2020.

SBA Economic Injury Disaster Loans (EIDL)

Working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.

The Act limits EIDLs to $2 Million for alleviating economic injury caused by the disaster. Applicants must have a credit history acceptable to SBA, show the ability to repay the loan and provide collateral for all EIDL loans over $25,000. Applicants who have not complied with terms of previous SBA loans may be ineligible.

The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 3.750 percent. The Act authorizes loan terms up to a maximum of 30 years. Loan proceeds cannot be used to refinance long-term debt. SBA may require borrowers to carry insurance.

Applicants may apply online, receive additional disaster assistance information and download applications at disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at 800-659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance.

Covid-19 Working Capital Access (CWCA) Program

Administered by the Pennsylvania Industrial Development Authority (PIDA), the program provides critical working capital financing to small businesses located within Pennsylvania that are adversely impacted by the COVID-19 outbreak.

Up to $100,000 is available for use as working capital, defined as capital used by a small business for operations, excluding fixed assets and production machinery and equipment. Any for-profit corporation, limited liability company, partnership, proprietorship or other legal business entity located in the Commonwealth of Pennsylvania having 100 or fewer full-time employees worldwide at the time of submission of the application are eligible.

The interest rate is zero for most businesses. Loans to agricultural producers at 2 percent interest. Loan terms are 3 years with a 12-year amortization. No payments will be due and payable during the first year. Principal and, if applicable, interest payments will be due monthly for years two and three. A balloon payment will be due and payable at the end of the third year.

All CWCA loan applications must be submitted through a Certified Economic Development Organization (CEDO). The CEDO will work with a business to determine if the CWCA loan program can assist and will discuss application process details. A list of CEDO’s operating within Pennsylvania is available at dced.pa.gov/CWCA.


Contact your H2R CPA liaison or reach out to us at 412-391-2920 or marketing@h2rcpa.com if you would like to discuss business loan strategy during these challenging times.