Mitigating COVID-19’s Commercial and Business Impacts: SBA’s Loan Programs

COVID-19 Update

Date: March 23, 2020

The global COVID-19 public health emergency has mobilized federal, state and local governments to provide economic relief as businesses and workers face a period of uncertainty. In designated states and territories, the U.S. Small Business Administration (SBA) is offering low-interest federal disaster loans to provide working capital for small businesses suffering economic injury as a result of the COVID-19 crisis.

Economic Injury Disaster Loan Program

After disasters, such as hurricanes, floods, tornadoes, earthquakes, wildfires and public health emergencies like COVID-19, the SBA is the primary source of federal funds to assist small businesses’ long-term recovery efforts. Under the Coronavirus Preparedness and Response Supplemental Appropriations Act recently signed by President Trump, upon receiving a request from a state or territory’s governor, SBA will issue, under its own authority, an Economic Injury Disaster Loan declaration. Once a declaration is issued, SBA will make loans available statewide to small businesses and private nonprofit organizations to help alleviate economic injury caused by COVID-19.

The SBA, which provides many loan resources to assist small businesses, is helping those suffering economic losses as a result of COVID-19 by offering low-interest federal disaster loans to help with operation costs. The SBA’s Economic Injury Disaster Loan program is offering up to $2 million to assist a small business in overcoming its temporary loss of revenue. The loan may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of COVID-19’s adverse impact on the business. The interest rate for these loans is 3.75% for small businesses and 2.75% for nonprofits.

To qualify, a business must:

  • be located in a declared disaster area;
    • Note: The number of declared designated areas is likely to change in the coming days. The SBA’s Current Declared Disasters webpage is the best source to monitor your respective state and/or county.
  • be a small business, small agricultural cooperative or nonprofit organization; and
  • have suffered “substantial economic injury,” which occurs when a business is unable to meet its obligations and pay its operating expenses.

Small businesses that qualify for an Economic Injury Disaster Loan can apply online or by mail. Additionally, they will need to provide a signed and dated IRS Form 4506-T, which gives permission for the IRS to provide tax return information to the SBA.

Other Access to Capital Programs

In addition to Economic Injury Disaster Loans, the SBA has developed Lender Match, a free online referral tool that connects small businesses with participating SBA-approved lenders within 48 hours. SBA also provides several loan resources for small businesses to access capital, such as:

  • 7(a) Loan Program: Offers loans up to $5 million to use for working capital, expansion/renovation, new construction, purchase of land or buildings, purchase of equipment, purchase of fixtures, leasehold improvements, refinancing debt for compelling reasons, seasonal line of credit, inventory or starting a business.
  • Express Loan Program: Provides loans up to $350,000 for no more than seven years with an option to revolve and has a turnaround time of 36 hours for approval or denial of a completed applications. Loan proceeds can be used for the same purposes as the 7(a) loan program described above.
  • Community Advantage Loan Pilot Program: Allows mission-based lenders to assist small businesses in underserved markets with a maximum loan size of $250,000. Loan proceeds can be used for the same purposes as the 7(a) loan program.
  • 504 Loan Program: Used to foster economic development and job creation and/or retention. The eligible use of proceeds is limited to the acquisition or eligible refinance of fixed assets.
  • Microloan Program: Loans are made to underserved markets, with a maximum loan amount of $50,000 and an average loan size of $14,000. Authorized uses of loan proceeds include working capital, supplies, machinery and equipment, and fixtures (not real estate).

The SBA offers many resources for small businesses affected by the COVID-19 crisis, including Economic Injury Disaster Loans, lender match services, and a variety of loan programs whose eligibilities are based on what a business does to receive its income, the character of its ownership, and where it operates.


Thompson Hine will continue to monitor the latest developments and provide updates as they arise to help businesses manage COVID-19’s commercial and business impacts. For more information about recommended steps, please contact:

Tom Mason

Francis E. (Chip) Purcell, Jr.

Ray McCann

Joseph R. Berger

Mona Adabi


We have assembled a firmwide multidisciplinary task force to address clients’ business and legal concerns and needs related to the COVID-19 pandemic. Please see our COVID-19 Task Force page for additional information and resources.

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