*Updated EIDL application process can be found here*
Economic Injury Disaster Loan is Open for Alaska
Alaska’s federal disaster declaration submitted by Governor Dunleavy has been approved by the Small Business Administration (SBA). The SBA Economic Injury Disaster Loan application is now open to business owners in Alaska.
Information and online application are available here: https://disasterloan.sba.gov/ela/
Be Ready: What will you need to apply?
- Completed SBA loan application (SBA Form 5) (this is electronic/online in the portal)
- Completed and signed Tax Information Authorization (IRS Form 4506-T) for the applicant, principals, and affiliates; each principal owning 20% or more of the applicant business, each general partner or managing member; and, for any owner who has more than 50% ownership in an affiliate business. Affiliates include, but are not limited to, business parents, subsidiaries, and/or other businesses with common ownership or management
- Schedule of Liabilities (SBA Form 2202) listing all fixed debts
- Personal Financial Statement (SBA Form 413) completed, signed, and dated by the applicant, each principal owning 20 percent or more of the applicant business, and each general partner or managing member
- Income, balance sheet, and cash flow documents
- 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
We have been alerted of a few items in the application process that have been known to create some confusion:
- SBA Form 5: When you begin the application, on the top left corner of Form 5, only select EIDL – this is for businesses applying for working capital to keep their business running. Do not check anything else
- ITEM 16– is asking if your business owns 50% or more of another business or subsidiary. If your business does not own or have subsidiaries then the answer is no
- Tax Form: When completing the tax authorization form- if a family member is part owner of any percentage, all family members will have to fill out this form
- Tax Returns: The most recent business tax returns are required. If the business is a sole proprietorship, it is immediately taken to a home application. This is not an error- the system will convert it into a business
- Personal Financial Statements: Required. This will be for personal information, not for the business
- Schedule of Liabilities: Required. Gathering financial statements for the business prior to applying will prepare them to do this quickly. The SBA is trying to accurately determine monthly expenses to identify the working capital needed to keep business afloat
- SBA 1368 form– Provides the monthly snapshot- if the numbers are very close each month, a business can use average amounts
Additional recommendations for the application
- Apply online versus mail
- Include the disaster specific name: “COVID-19” or “Coronavirus:
- Write your password down; neither the system nor any personnel is able to retrieve it
- Save your work at every prompt as you go. The website may go down periodically due to high volume. Try again at a later time if this occurs
- Do not rush through the application. Check and re-check the filing requirements to ensure all the needed information is completed prior to submission. An incomplete application or will cause a processing delay
- Be sure to use the same contact information (business name and the name of all owners) that you use on your federal tax returns. Double-check they match.
- Tax returns: If your tax returns reference other businesses that you own, you must also submit those tax returns in order to avoid processing and decision delays.
- Additional funding: If more funds are needed, applicants can submit supporting documents and a request for an increase. If fewer funds are needed, applicants can request a reduction in the loan amount.
- If the loan request is denied, the applicant will be given up to six months in which to provide new information and submit a written request for reconsideration.The Alaska SBDC can assist you with preparing for the loan application, reviewing your financials/profit and loss documents, cash flow modeling scenarios, business planning, and other aspects of running and making decisions for your business during this time. Please register if you need to meet with an Alaska SBDC Business Advisor on this process.
Who is eligible?
- Small businesses (500 employees and under) impacted by COVID-19
- Small businesses that offer services to the businesses impacted by COVID-19
- Based on the size of the business, the type of business, and financial resources
- Eligibility for Economic Injury Disaster Loans is based on the financial impact of the Coronavirus (COVID-19)
Who is not eligible?
Religious and charitable organizations (a specific type of nonprofits), casinos/racetracks, agricultural enterprises, and businesses that fall under the cannabis industry.
How much can you apply for?
- Eligible small businesses may qualify for up to a $2 million dollar loan
- Small business interest rates for this disaster are 3.75% with terms up to 30 years
- Nonprofit organization rates for this disaster are 2.75% with terms up to 30 years
How can your business utilize the funds if approved?
This loan can be used to pay payroll, accounts payable, and other bills (not debt) that could have been paid if the disaster had not occurred. The loan is not intended to replace lost sales, lost profit, or expansion. Funds cannot be used to pay down long-term debt. Learn more at the SBA COVID-19 information page.
When can you expect your business to receive the funds if approved?
- Eligible businesses that submit complete loan packages could receive the money within three (3) weeks on a first-come, first-serve basis.
- Incomplete information and verification of collateral will delay the approval process
Are you ready to apply?
- Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website at https://disasterloan.sba.gov/ela
- Not the recommended submission method, but available: Paper loan applications can be downloaded from www.sba.gov/disaster.
- Completed applications should be mailed to the U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155
- Disaster loan information and application forms may also be obtained by calling the SBA’s Customer Service Center at 800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) or by sending an email to email@example.com
- The deadline to apply for an Economic Injury Disaster Loan is Dec. 21, 2020
A note from us at the Alaska SBDC
We are here to help. Check this site and our social media platforms periodically. You are also welcome to sign up for our newsletter here for updates as they are made available.
Alaska SBDC On-Demand Workshops Are No-Cost Through April
Due to the immediate difficulties presented to small businesses impacted by Coronavirus disease (COVID-19), ALL Alaska SBDC On-Demand workshops are being offered at no cost to anyone through April. Visit the full listing of Alaska SBDC On-Demand workshops at https://aksbdc.ecenterdirect.com/events/