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The Small Business Administration (SBA) has announced new programs created by the Coronavirus Aid, Relief and Economic Security (CARES) Act to support small businesses during the COVID-19 pandemic crisis.
Rural electric cooperatives are eligible to apply for the Economic Injury Disaster Loan (EIDL) program, and NRECA is working to determine if cooperatives qualify for the Paycheck Protection Program (PPP) loan initiative.
[blockquote quote="While%20CFC%20staff%20is%20receiving%20a%20lot%20of%20questions%20about%20the%20program,%20we%20are%20not%20encouraging%20or%20discouraging%20cooperatives%20to%20apply%20for%20an%20EIDL." author="Joel%20Allen,%20CFC%20Senior%20Vice%20President%20of%20Member%20Services" /]
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“CFC co-signed a letter to the SBA thanking them for their leadership and working to ensure all cooperatives and their employees have access to CARES Act financial programs,” said CFC Senior Vice President of Corporate Relations Brad Captain.
EIDL Program Details
|Eligibility||Must show economic injury due to COVID-19|
Generally available only to businesses with <500 employees
|Lender||SBA Disaster Assistance|
|Amount||Up to $2 million|
|Interest Rate||3.75% for small businesses|
2.75% for nonprofits
|Term||Up to 30 years|
|Purpose||Working Capital (not lost profits or business expansion)|
|Collateral||Yes, if available, for loans over $25,000.|
SBA will not decline a loan for lack of collateral.
|Approval Time||30+ days; another 5 days to get funding|
|Emergency Grant||Applicant may obtain $10,000 short-term advance while the loan application is pending. |
No repayment of the advance is required, even if SBA denies the loan application, applicant accepts approved loan or applicant declines approved loan.
Guidance on EIDL Program
“While CFC staff is receiving a lot of questions about the program, we are not encouraging or discouraging cooperatives to apply for an EIDL,” explained CFC Senior Vice President of Member Services Joel Allen. “Applying for this loan program is a business decision best made by the local cooperative. Participation in the EIDL program will not affect their CFC borrower status.”
CFC members can watch a recording of the National Cooperative Business Association’s (NCBA) webinar on Demystifying SBA’s Economic Injury Disaster Loans. The webinar featured SBA Economic Development Specialist David Hincapie, NCBA Director of Government Relations Kate LaTour and was moderated by NCBA President and CEO Doug O’Brien.
Guidance on PPP Loans
The U.S. Senate Committee on Small Business and Entrepreneurship distributed a small business owner’s guide to the CARES Act stating the PPP provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during the pandemic.
“While SBA issued an Interim Final Rule, NRECA and other national cooperative organizations continue to work to determine PPP loan eligibility,” stated Captain. “Many electric cooperatives are ensuring their small businesses, commercial and industrial members are aware of the program and they can use it to pay their utility bills.”
CFC members can register for next week’s CFC Financial Series Webinar to learn more about federal COVID-19 assistance available to electric cooperatives. CFC members can log in to the CFC Member Website to register in advance. The webinar will take place Wednesday, April 8, 1 to 2 p.m. Eastern Time.
Additional CARES Act Resources