The federal government last week granted Governor Kristi Noem’s request for an emergency declaration, adding South Dakota to a growing list of states that were approved for Small Business Administration assistance during the disaster. COVID-19.
The SBA’s Disaster Assistance Office exists to support small businesses when natural disasters such as tornadoes, floods, fires and others affect their operations. In most cases, disaster assistance is concentrated in individual localities, but with COVID-19, the SBA is tasked with serving businesses nationwide. As such, applications were subject to longer wait times and delayed approvals.
After collecting surveys from businesses statewide, Governor Noem was able to assess the loss facing South Dakota’s small business community and justify his request for an emergency declaration, which was submitted. Tuesday March 19.
Now that the application process is open, South Dakota business owners can apply for up to $ 2 million each in Economic Disaster Loans (EIDL). Jaime Wood, district manager of the South Dakota SBA office, encourages companies to take this opportunity to stay operational.
“It’s an injection of capital that basically acts like a band-aid to keep small businesses afloat,” she said.
Disaster loans under the EIDL program are long term and offer low fixed interest rates of less than four percent. Wood cautions business owners against putting their expenses on business credit cards or getting involved with predatory lenders. In both cases, she cites interest rates between 20 and 40 percent that have the potential to be devastating for a business takeover.
Who is eligible for the EIDL program?
Small businesses or non-profit organizations that have suffered losses due to the economic impact of COVID-19 are eligible to apply for these loans. Wood encourages business owners to contact their existing lenders now to discuss their current economic situation. This could include requesting deferred payments or other forms of assistance during this period. Additionally, she advises business owners to seek out local grants and relief funds that may be available.
Free resources like the Small Business Development Center (SBDC) are also available to help businesses assess their situation. SBDC advisors can explain to businesses the financial implications of changes to personnel, production, hours of operation, or even temporary shutdowns.
If these options are not enough, an SBA loan can be used to fill the gaps. Business owners can use EIDL funds for all operational expenses, including rent, payroll, and lost income. Additionally, if owners or their employees become ill and need to self-quarantine, EIDL funding can be used to cover costs incurred.
Applicants will need to be prepared with significant documentation to substantiate their eligibility for the EIDL program, including three years of tax history and documentation, as well as six months of screenings. If it is a new business, the SBA will simply assess the history available.
Accurate history and projections are essential for the SBA to determine the appropriate terms and interest rates. Once a business owner has gathered all of their information, they can create an account and apply online here.
In the coming weeks, the SBA will see a high volume of applicants. Wood says the approval process depends on the business owner’s credit history and the completeness of the application. What often slows down applications is a lack of information, which is why she encourages companies to fully prepare for the process.
In addition to financial histories and projections, Wood says business owners should link their business losses – actual or projected – to COVID-19. Since the SBA defines the disaster to begin on January 31, 2020, the downtrends in business must correlate with this period. The end date at this point is unknown as the impact of COVID-19 is ongoing.
The goal of the EIDL program is to provide a bridge for small businesses in this time of uncertainty and economic downturn. Wood encourages business owners to stay strong and do what it takes to innovate and deliver value to customers.
“There are a lot of nuggets of hope and opportunity here. There will be an end, and we’ll get through it, ”Wood said. “South Dakotas are resilient and innovative. Together, we bounce back from disasters. ”
In Sioux Falls, Wood believes that small businesses can successfully navigate situations of this proportion.
“Sioux Falls is really on the cutting edge right now because of our resilience, our cohesive nature and the great business vibe we have,” she said. “This community knows how to pull itself together in the face of adversity. “
For more information on the SBA’s disaster assistance in response to COVID-19, or to apply for an economic harm loan, visit www.sba.gov/funding-programs/disaster-assistance. The South Dakota District Office can be reached by phone at 605-330-4243.
This article was produced by Startup Sioux Falls and syndicated by the Sioux Falls Business Journal. Startup Sioux Falls is a digital hub that aims to connect the communities, businesses and nonprofits that make up the Sioux Falls startup ecosystem.