How to Apply for a Small Business Loan in Indiana
If you’re a small business owner in Indiana who’s suffered a loss of income as a result of the COVID-19 pandemic, you may be eligible for support. As part of the CARES Act of March 27, two new loans have become available with the intent of providing an immediate cash injection to small businesses struggling to keep up with the demands of payroll expenses and operating costs.
Paycheck Protection Program
As the Indiana Small Business Development Centre explains, the Paycheck Protection Program (PPP) is a loan that aims to incentivize small businesses to maintain their payroll. Conditions do apply, but if you pass the basic eligibility requirements (see below), you’ll find the program remarkably free of the usual bureaucratic loopholes and red tape.
Eligibility Requirements for the Paycheck Protection Program
- To qualify for the PPP, businesses will need to have been in business since at least January 31, 2020, and satisfy the following conditions:
- Employ fewer than 500 workers (businesses that have a payroll of more than 500 employees may still apply if they are classified as a small business under the SBA Size Standards
- Be a registered 501 Veteran organization, a cooperative, a private non -profit, or a tribal business
- Sole proprietors, independent contractors, and self-employed persons are also eligible to apply.
The Small Print
PPP loans come with the following terms:
- A 2-year maturity
- Zero SBA fees
- A fixed interest rate of 1%
- Automatic loan payment deferral for 6 months
Providing the funds are used for payroll costs, interest on mortgages, rent, and utilities, with at least 75% going towards payroll/ retaining employees for at least 8 weeks, the loan will be fully forgiven.
Applying for the Paycheck Protection Program
Although the Small Business Administration (SBA) administers the loans, applications should be made via an approved lender. This includes:
- Existing SBA 7(a) lenders
- Federally insured depository institutions
- Federally insured credit unions
- Farm Credit System institutions
To view the type of information that will be requested by the lender, it’s advisable to download a copy of the PPP borrower application form from the SBA website. This will then need to be submitted, along with your payroll and tax information, to your preferred lender. A full list of approved lenders can be found at sba.gov, although those who would rather stick to a bank will find the following list from esellercafe.com a good place to start.
- America First Credit Union
- Ameris Bank
- Atlantic Capital Bank
- Bank of America
- Blue Ridge Bank
- Celtic Bank
- First Commonwealth
- First Home Bank
- First United Bank
- Fountainhead SBF
- Fulton Bank
- JPMorgan Chase
- Midwest BankCentre
- Old National
- Peapack-Gladstone Bank
- Pinnacle Bank
- PNC Bank
- Ready Capital
- Silicon Valley Bank, or SVB
- Sunrise Banks
- Suntrust Bank
- TD Bank
- Umpqua Bank
- Univest Bank and Trust Co.
- US Bank
- Wells Fargo
- West Town Bank & Trust
The Economic Injury Disaster Loan (EIDL)
Like the PPP, the Economic Injury Disaster Loan (EIDL is administered by the SBA and is intended to support small businesses suffering a temporary loss of revenue as a result of COVID-19. The program provides loans up to a maximum of $2 million, and is intended to cover payroll (including compensation, salaries, healthcare and retirement benefits, and severance pay) and operating costs (including mortgage payments, rent, and utilities).
Eligibility is limited to businesses that either employs less than 500 employees or that satisfy the SBA Size Standards. As directed by the SBA, businesses should also fulfill the following:
- Be organized for profit
- Have a place of business in the U.S
- Operate primarily within the U.S. or makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor
- Is independently owned and operated
- Is not dominant in its field on a national basis
The Small Print
The maximum amount of EIDL that can be claimed is $2 million. Other conditions to note include:
- Up to $200,000 can be borrowed without a personal guarantee
- Approval is conditional on a credit check
- There is no requirement to demonstrate you have been unable to get credit elsewhere
- If you borrow up to a maximum of $25,000, you do not need to provide collateral. A general security interest in the business assets can be used against loans of $25,000 plus
- The SBA will review your business tax records as part of the application review
- The interest rate is fixed at 3.75%
- The loan term is up to 30 years
- You can request $1,000 per employee, up to a maximum of $10,000, as a forgivable grant, which will be paid within 3 days of loan approval.
Applying for an Economic Injury Disaster Loan
In order to simplify the process, the SBA has created a streamlined application process that should take a maximum of around 2 hours to complete. All applications will need to be filed directly at the SBA website.
Step 1: Disclosure
The first step of the process involves verifying your eligibility and confirming that all information provided in the application will be truthful and accurate.
Step 2: Business Information
Once you’ve confirmed your eligibility, you’ll be asked to confirm information relating to the business. This will include providing your income statement as of January 31, 2020. Note that questions marked with a red star are obligatory; questions without a red star only need to be completed if applicable.
Step 3: Business Owners Information
Next, you’ll be asked to confirm whether the business is owned by individuals or another business. If owned by individuals, you’ll need to confirm the following for any persons that own at least a 20% stake in the business:
- Date of place
- Citizenship status
Step 4: Additional Information
In the final section, you’ll be asked to confirm any relevant criminal history relating to either the business or its owners. You’ll also be asked to confirm whether you would like to take advantage of the $10,000 advance, and the bank details to which you’d like payment to be made.