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Law360 (March 12, 2020, 8:17 PM EDT ) Small businesses suffering major financial setbacks in the face of the coronavirus outbreak can apply to receive up to $2 million in federal disaster assistance loans, the U.S. Small Business Administration said Thursday.
"Our agency will work directly with state governors to provide targeted, low-interest disaster recovery loans to small businesses that have been severely impacted by the situation," SBA Administrator Jovita Carranza said in a statement.
The low-interest loans are intended to help the country's small businesses be more resilient to coronavirus-related economic disruptions, Carranza said, crediting President Donald Trump's "bold, decisive action" in passing the Coronavirus Preparedness and Response Supplemental Appropriations Act.
The bill, passed with nearly unanimous support in Congress and signed into law on March 6, provides $8.3 billion in emergency funding for federal agencies to respond to the COVID-19 outbreak.
Of the $8.3 billion, about 81% is designated for the domestic response — with the vast majority going to the U.S. Department of Health and Human Services — and about 19% going toward the international response, mostly to the U.S. Agency for International Development.
The bill provides for $20 million in small business disaster relief loans.
The SBA's lending program announcement comes as many industries in the U.S. and abroad are struggling to navigate labor shortages, supply chain disruptions and expanding travel restrictions.
Trump said on Wednesday that he will suspend nearly all travel from Europe to the U.S. for 30 days as part of the administration's effort to contain the outbreak of the novel coronavirus.
Hours after the World Health Organization formally declared the COVID-19 outbreak a global pandemic, Trump announced in an address to the nation that the 30-day suspension, which excludes the United Kingdom, will take effect at 11:59 p.m. on Friday.
Law firms and courts across the country have closed or instructed employees to work from home as the virus spreads. The U.S. Supreme Court on Thursday said it was closing to the public, though it will stay open for official business.
The SBA said that under its lending plan, businesses with credit available elsewhere are not eligible.
The interest rate on these federal loans is 3.75% for small businesses and 2.75% for nonprofits. The loan repayment plans will be up to a maximum of 30 years, the agency said.
Fixed debts, payroll, accounts payable and other bills that a small business can't pay due to the coronavirus outbreak can all be paid using these loans, the agency said Thursday.
The agency said that small businesses seeking a COVID-19 disaster relief loan must go through their state or territory's governor's office. Once the agency receives a request from a governor, it will issue an economic injury disaster loan declaration. The small business will then be able to apply for a loan.
The SBA did not immediately respond to requests for comment.
--Additional reporting by Jimmy Hoover, Sarah Jarvis, Suzanne Monyak, Elise Hansen and Alex Lawson. Editing by Nicole Bleier.
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