March 26, 2020 – As more and more organizations struggle to address cash flow challenges brought on by the coronavirus pandemic, one lifeline that has been extended to small businesses and non-profits in New York state is the United States Small Business Administration’s (SBA) Economic Injury Disaster Loan Program. So who is eligible, and what does the program entail?

SBA’s disaster loans are available to small businesses, small agricultural cooperatives, small aquaculture businesses and most private not-for-profit organizations, with “small” defined as businesses with 100 or less employees or manufacturers with 500 or less (see https://www.sba.gov/size-standards for further information).

The loans can be used to pay fixed debts, payroll, accounts payable and other bills that could have been paid had the disaster not occurred, but are not intended to replace lost sales or profits. Eligible businesses include those directly affected by the disaster, as well businesses offering services to them, and other indirectly related businesses that are likely to be harmed by losses in their community. To be eligible, the business must have a tangible and significant presence in the declared disaster area (merely have a mailing address in the disaster area is not sufficient).  In this case, the declared disaster area includes all of New York State, and certain counties in Connecticut, Massachusetts, New Jersey, Pennsylvania, and Vermont, although additional disaster areas will likely be declared as the coronavirus is now present nationwide.

Entities that are not eligible include:

• Agricultural enterprises (as defined in Section 18(b)(1) of the Small Business Act)
• Religious organizations
• Charitable organizations
• Gambling concerns (any entity that derives more than 1/3 of its annual gross revenue from legal gambling activities)
• Casinos and racetracks

SBA disaster loans bear interest at a rate of 3.75% (2.75% for not-for-profits) and can have a term of up to 30 years. Loans can be in any amount up to $2,000,000, with loans over $25,000 requiring collateral, with the SBA taking real estate as collateral when it is available.

Loan applications may be made online at https://disasterloan.sba.gov/ela, or via paper application (available at www.sba.org/disaster). There is no cost to apply, and no obligation to take the loan if offered.  Additional information can be found at

• SBA’s Customer Service Center (800) 659-2955 or disastercustomerservice@sba.gov
• Empire State Development’s Resource Guide to COVID-19 SBA Disaster Loans https://esd.ny.gov/resource-guide-covid-19-disaster-loans

Our Financial Advisory Service Team is here to assist you in accessing liquidity and how to respond to changed business circumstances in light of COVID-19 while navigating the terms and conditions of the emergency loan programs identified above.   Our team focuses on helping business owners and companies identify and secure short-term and long-term capital.  Whether it’s domestic or foreign A/R, inventory, purchase order, construction, mezzanine financing, term loans and equity, our team has multiple sources of financing that will provide solutions to our clients.

For more information, contact Brendan Brady at bbrady@dopkins.com.

About the Author

Brendan P. Brady CPA, CVA

Brendan is responsible for managing client engagements, team scheduling, training and development. He leads general and specialized audits as well as internal control projects, and is one of the leaders of the Firm’s employee benefit plan audit practice. He uses his experience to offer management advice and suggestions for improving operational efficiency by obtaining a thorough understanding of a business, not just from the controller’s standpoint, but from management’s and the operational side.