- Trump announced a major infusion to small business lending as part of a broader coronavirus response.
- The low-interest loans from the Small Business Administration will be made "effective immediately" in states and cities affected by COVID-19.
- Trump also asked Congress to bolster current funding levels for the SBA lending program to $50 billion.
Small businesses in areas affected by the novel coronavirus are now being granted access to low-interest loans from the Small Business Administration (SBA). President Donald Trump announced the move during a stark Oval Office address in which he outlined some immediate actions being taken to quell the financial upheaval.
Just hours after the World Health Organization formally announced that COVID-19 is a "global pandemic" on Wednesday, Trump announced a travel ban for most of Europe and a package of initiatives aimed at helping American workers and business owners the U.S. Chief among those measures is the call for Congress to approve an additional $50 billion in funding for the SBA's lending program.
Though he stressed that the COVID-19 situation is "just a temporary moment of time that we will overcome together as a nation and as a world" and not a financial crisis, Trump said the infusion of additional funds will "help small businesses overcome temporary economic disruptions caused by the virus."
The address came days after global markets experienced a tailspin over oil prices and continued COVID-19 disruptions prompted Wall Street to halt trading for 15 minutes on Monday.
This morning, SBA Administrator Jovita Carranza praised the president's actions in a press release, calling last night's announcement a "bold, decisive action to make our 30 million small businesses more resilient to coronavirus-related economic disruptions. Small businesses are vital economic engines in every community and state, and they have helped make our economy the strongest in the world. Our agency will work directly with state governors to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation."
Trump also announced that he was calling on Congress to provide "immediate payroll tax relief." He said he would also instruct the Department of the Treasury to defer tax payments for anyone impacted by the novel coronavirus. This deferment would come without interest or penalties and would "provide more than $200 billion of additional liquidity to the economy."
How to get help with SBA loans
One major function of the SBA is to provide federal relief to small businesses, private nonprofits, homeowners and renters impacted by major physical and financial disasters. Following the president's announcement, the SBA is providing the loans through its Economic Injury Disaster Loan program.
According to the SBA, these loans are available to small businesses, small agricultural cooperatives and most private nonprofits. The loans are disbursed to entities that have experienced a "substantial economic injury," which the SBA defines as a situation where "the business is unable to meet its obligations and to pay its ordinary and necessary operating expenses."
This morning, the SBA revealed that the coronavirus-related loans will have a 3.75% interest rate for small businesses "without any credit available elsewhere" and 2.75% interest for nonprofits. Businesses with credit available elsewhere are not eligible for the loans. Repayment terms can go up to 30 years, which officials said helps "keep payments affordable."
Only businesses in designated states and territories will be considered for this latest batch of emergency funding. Affected locations can be added to the list of eligible areas at the request of a state governor, according to the Coronavirus Preparedness and Response Supplemental Appropriations Act.
In the event that a business is approved for the loan, the SBA can provide up to $2 million for financial obligations and expenses, though the specific amount will be based on "your actual economic injury and your company's financial needs, regardless of whether the business suffered any property damage."
Carranza said the SBA is working to provide additional support to small businesses along with potential funding.
"The SBA continues to assist small businesses with counseling and navigating their own preparedness plans through our network of 68 district offices and numerous resource partners located around the country," she said. "The SBA will continue to provide every small business with the most effective and customer-focused response possible during these times of uncertainty."
What SMBs should do now to deal with the coronavirus
The Centers for Disease Control and Prevention (CDC) is urging small businesses to take the following precautionary steps to counteract the virus's spread:
- Actively encourage sick employees to stay home.
- Separate sick employees.
- Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees.
- Perform routine environmental cleaning.
- Advise employees to take certain steps before traveling, including checking the CDC's travelers' health notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from designated countries with risk of community spread of coronavirus, and information for aircrew, is available on the CDC website.
- Employees who are well but have a family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
- If an employee is confirmed to have COVID-19, employers should inform their fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act. Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
For additional information on the SBA's disaster assistance program, call 1-800-659-2955 or email firstname.lastname@example.org.