SBA Economic Injury Disaster Loans Available to California Small Businesses (2024)

FAQs

What type of businesses are eligible for SBA loans? ›

Funds you get from SBA must be repaid over time.

SBA information is also available at www.SBA.gov/disaster or by email at disastercustomerservice@sba.gov.

If you have bad credit, or your small business credit score isn't stellar, the SBA will still consider other factors, such as recent income and your history of rent, utilities, insurance, and other payments, to determine whether you qualify for an SBA disaster loan.

Understanding EIDL Loan Forgiveness

Unfortunately, there is no current program for complete EIDL loan forgiveness. However, the SBA may consider partial forgiveness or loan modification in extenuating circ*mstances. This typically applies to borrowers who can demonstrate financial hardship.

First and foremost, your business must be for-profit and operate within the United States or its territories. Non-profit organizations are not eligible for SBA loans. Additionally, you must have exhausted all other financing options, including personal assets, before turning to an SBA loan.

SBA Express loans provide small businesses and startups like yours with up to $500,000 — and in record time. Entrepreneurs can get approved in as few as two or three days, making them one of the fastest options for funding out there.

Interest rates can be as low as 4 percent for businesses, 3.25 percent for private nonprofit organizations and 2.688 percent for homeowners and renters with terms up to 30 years. Loan amounts and terms are set by SBA and are based on each applicant's financial condition.

Do SBA loans require a down payment? Yes, the minimum SBA loan down payment requirement is 10% for 7(a) and 504 loans, although this amount can vary based on a business's cash flow and collateral. For example, weak cash flow or low-value collateral can increase the down payment requirement to 30% of the loan amount.

There will be a loan offer made to the borrower within 21 days of a complete loan application.

One common reason for SBA disaster loan denials is incomplete or insufficient documentation, requiring further clarification, or missing necessary forms. The reality is that the SBA small business loan application process is lengthy and meticulous.

What is the maximum SBA disaster loan amount? ›

In 2023, SBA revised the disaster loan limit for personal property disaster loans to $100,000, and real property loans to $500,000.

As a result, business owners will likely face attachment of personal assets, such as bank accounts, vehicle repossession, and even foreclosure to collect the debt. It will also significantly impact their personal credit score as they have given the personal guarantee.

Loan Repayment: Business closure does not automatically eliminate the obligation to repay the EIDL. Borrowers are still responsible for repaying the loan according to the agreed-upon terms and conditions.

Filing for bankruptcy does not automatically discharge any debt, including an SBA Economic Injury Disaster Loan (EIDL). While bankruptcy can provide debt relief, it doesn't guarantee the immediate discharge of your SBA EIDL loan.

SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.

SBA loan funds must be used for legitimate business purposes. You cannot purchase personal assets or pay off personal debts with the loan proceeds. The SBA guidelines specifically state: “An SBA-guaranteed loan cannot be made solely to an individual.”

Generally, the business owner needs to have a credit score in the 600s, depending on the lender and type of loan. The loan must be used for an approved purpose, such as working capital or equipment purchases. You must have a clean criminal record, and typically, you must not owe money to the federal government.