Know Your Options: SBA Disaster Relief Loan

SBA Disaster Relief Loan

As small business owners and as a community, all of us are sailing in uncharted waters. All of us are in the same boat, filled with uncertainty and fear. What does the future hold? Is my business going to survive this? How am I going to pay my bills? There are so many concerns that all of us have and most of it is deeply rooted in our financial situation and future. There are a number of economic stimulus packages that are being discussed locally and federally. As of today, March 21st, there are not many options available. However, our representative and community leaders are working diligently to provide us with a little relief. The first financial option to become available to small business is the Small Business Administration (SBA) Disaster Loan program. This is the first time in the history of the SBA that this loan has been made available for a pandemic (these loans are generally leveraged during natural disasters).

As of Thursday, March 19, the State of Colorado has been designated as a disaster area by the Small Business Administration (SBA). This means that small business owners in the state of Colorado can now start applying for Disaster Relief Loans through the SBA. Applicants can request up to $2 million assist with paying fixed debts, payroll, accounts payable and other bills that can’t be paid because of the impact of Covid-19. The interest rate is 3.75% for small businesses with terms up to 30 years in an effort to keep payments affordable. Loans over $25,000 require collateral. SBA takes real estate as collateral when it is available. SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.

The purpose of these loans are to assist small businesses with paying fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion.

To apply for this loan, apply directly through the SBA. This loan is not available through traditional lenders. During the application process your loan officer will evaluate your credit history, ability to repay the loan, disaster eligibility (the business has to be physically located in a designated disaster area) and has suffered working capital losses due to the disaster, Covid-19. When applying for a disaster relief loan you should be prepared to provide the following documentation.

Required documents:

• Completed SBA loan application (SBA Form 5).

• Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates.

• Complete copies of the most recent Federal Income Tax Return.

• Schedule of Liabilities (SBA Form 2202).

• Personal Financial Statement (SBA Form 413).

Other Information may also be requested:

• Complete copy, including all schedules, of the most recent Federal income tax return for principals, general partners or managing member, and affiliates (see filing requirements for more information).

• If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year.

• A current year-to-date profit-and-loss statement.

• Additional Filing Requirements (SBA Form 1368) providing monthly sales figures. (This is especially important for Economic Injury Disaster Loans.)

There are two primary reasons for a delay in the application process:

1) Missing supporting documentation and missing information. Make sure that you have provided thorough documentation and have submitted all requested information before applying.

2) Failing to disclose associated businesses or subsidiaries. This can include other businesses owned by the company or business owner(s).

The team at HR Branches and BRW Tax & Accounting have attended virtual training through the Pikes Peak SBDC on this loan program and have stayed abreast of all updates and information associated to this loan program. In every meeting and training that we have attended, it has been made explicitly clear by SBA representatives that if you feel that the Covid-19 disaster has or will negatively impact your business, you should apply for a disaster relief loan as soon as possible. When applying, they recommend that you apply electronically. While paper applications are available, they will slow down your application process considerably.

For assistance in applying for a disaster relief loan, contact your local Small Business Development Center. They have trained individuals who can help you with the application process.

For additional information, please contact the SBA disaster assistance customer service center. Call 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail

Visit for more information and to apply.

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