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Disaster Funding and Loans

Q: I am a small business and need a loan to stay in business. What options are available?

A: The U.S. Small Business Administration (SBA) administers the Paycheck Protection Program (PPP). PPP is designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA resumed accepting PPP loan applications from approved lenders on behalf of eligible borrowers on Monday, April 27, 2020. Congress approved an additional $310 billion in appropriations for the PPP loan initiative through an amendment to the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Eligible small businesses should work with an approved lender to apply and should carefully review PPP regulations and certifications required to obtain a loan on the SBA’s website. Download a list of participating PPP lenders in Texas or a list of all PPP lenders.For additional guidance from the SBA on COVID-19 resources, visit their website here. Please continue to check with your local and regional economic development organization for local resources which may be available, as well as your local financial institutions.

Q: How do I receive forgiveness on the Paycheck Protection Program (PPP) Loan?

A: Small businesses must apply through their lender for forgiveness on their loan. The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines,or if salaries and wages decrease. In their application, small businesses must include the following:

 documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings

 documentation verifying payments on covered mortgage obligations, lease obligations and utilities

 certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use

Q: Where can I find more information regarding how the Coronavirus Aid, Relief, and Economic Security (CARES)Act can help my business?

A: The CARES Act was passed by Congress on March 27, 2020. The programs and initiatives in the Act are intended to assist business owners and nonprofits with current needs due to the COVID-19 crisis. The SBA and the U.S.Department of Treasury announced a robust mobilization effort of banks to allow businesses to contact a participating SBA 7(a) lender, bank, or credit union and apply for a loan. Some of the small business provisions in the Act are outlined below. For specific loan requirements, application details and additional information, download the CARES Act and PPP Loan Overview.

Paycheck Protection Program - PPP is designed to provide a direct incentive for small businesses to keep their workers on the payroll. The SBA resumed accepting applications on April 27, 2020, through additional appropriations approved by Congress.

Economic Injury Disaster Loan Advance - With the additional appropriations provided, SBA will resume processing EIDL Loan and Advance applications that are already in the queue on a first-come, first-served basis.The SBA will provide further information on the availability of the EIDL portal to receive new applications as soon as possible.

Small Business Debt Relief Program - This program provides immediate relief to small businesses with non disaster SBA loans, in particular 7(a), 504 and microloans.

 Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship - This provision provides a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis.

 Delay of Payment of Employer Payroll Taxes - This provision allows taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020.8.

Q: Can a foreign-owned small business qualify for a disaster loan through the SBA?

A: In order to qualify for a loan through the SBA, a foreign-owned small business must have a place of business located in the U.S., which operates primarily within the U.S. or which makes a significant contribution to the U.S.economy through payment of taxes or use of American products, materials or labor. Foreign-owned businesses are subject to SBA’s size standards for their particular industry. The size standard for employment includes all employees globally, including any foreign affiliate. SBA’s size standard chart is available on SBA’s website. Alternatively, the SBA also provides a size standards tool. To be eligible, the foreign-owned business may be in the legal form of an individual proprietorship, partnership, limited liability company, corporation, joint venture,association, trust or cooperative, except that where the form is a joint venture there can be no more than 49%participation by foreign business entities in the joint venture.EIDL Eligibility: U.S.-based small businesses may have owners located overseas (either individuals or holding companies) and may be eligible. But, if there is any one owner with 20% or more ownership, they must be a qualified alien, as defined under Title 8 of the U.S. Code, to be eligible.PPP Eligibility: Foreign-owned companies are eligible for the Paycheck Protection Program based on the PPP’s Affiliation Rules. One of the eligibility criteria for a PPP loan is that the business must be located in the U.S. The loan amount available is based on payroll costs and PPP only considers payroll costs that include compensation of employees whose principal place of residence is in the U.S. Foreign-owned businesses are subject to SBA’s size standards, which can be found at the SBA PPP website. The PPP application allows for non-U.S. citizens to check a box. If there is an issue with the non-U.S. owner submission, your lender should call SBA’s E-Tran hotline for guidance at 1-833-572-0502.9.

Q: Besides SBA loans, where can I go for financial assistance for my business?

A: Financial resources may be available in your local community. Check with your local and regional economic development organization for local resources which may be available, as well as your local financial institutions.Local CDFIs may also be able to provide assistance. Businesses can find a CDFI near them by utilizing the CDFI Locator.