Small businesses are in crisis, and nowhere is this more true than in Mississippi. According to the Mississippi Economic Council, nearly 88 percent of Mississippi business leaders have reported that their operations have suffered as a result of the COVID-19 pandemic, with 64 percent reporting a loss of income of up to 60 percent. More worryingly still, 60% of the organizations that reported an adverse impact were small businesses. As organizations employing fewer than 500 workers are among the biggest employers in the state, the figures have potentially devastating implications.
In response to the crisis, the government has introduced a package of measures designed to provide cash relief to those businesses worse affected. Of particular import to small businesses are the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL). Both loans are administered by the Small Business Administration (SBA) with the intent of helping small organizations meet operating and payroll costs. Here’s how to apply for one of the new small business loans in Mississippi.
The Paycheck Protection Program
As part of the CARES Act of March 27, the Paycheck Protection Program provides a much-needed cash injection to those small companies struggling to meet payroll and operating expenses as a result of the pandemic. As Mississippi Bankers Association President and CEO Gordon Fellows says, “Mississippi banks are committed to serving their communities in as many ways as possible, and the Paycheck Protection Program is one of the important tools banks can use to support local small businesses. We encourage small business owners to remain patient and in close contact with local bankers to take advantage of this and other opportunities available during this pandemic.”
So, what exactly is the PPP, and who’s eligible to apply for it? With regards to the first question, the PPP offers a low-interest loan of up to $10 million. Use of the funds is strictly controlled, and businesses are expected to use the relief towards payroll costs (including wages and other forms of compensation, severance pay, holiday pay, and medical and retirement benefits) and operating costs such as mortgage interest payments, fixed debts, utilities, and rent only. Chief terms of the PPP to note include a two-year loan term, a fixed interest rate of 1%, automatic payment deferral for the first 6 months, and no early payment or administration fees.
As to who’s eligible to claim, the loan is limited to business that:
- … were launched prior to Jan 31, 2020
- … employ no more than 500 workers OR who meet the definition of a ‘small business’ according to the SBA Size Standards
- … are registered as a 501 Veteran organization, employee-owned cooperative, private non -profit, or tribal business
- Sole proprietors, independent contractors, and self-employed persons are also welcome to apply.
- How to Apply for the Payment Protection Program in Mississippi
Although the SBA administers the PPP, you will need to apply directly via an approved lender (this extends to existing SBA 7(a) lenders, federally insured depository institutions, federally insured credit unions, and federally insured credit unions). Start by downloading the application form from the SBA website. Once completed, submit the application along with the supporting documentation to your chosen lender.
The Economic Injury Disaster Loan
Like the PPP, the Economic Injury Disaster Loan (EIDL) is a low-interest fund administered by the SBA. Available in loan amounts of up to $2 million (the exact amount will depend on business needs and expected payroll costs), funds can be used against operating and payroll expenses. You are entitled to apply for both the PPP and EIDL simultaneously, but only on the condition that the funds will be used for different purposes (e.g. if you use the PPP to cover wages, you’ll be expected to use the EIDL against operating costs). Chief terms to note include:
- For loans of less than $200,000, no personal guarantee is required
- A credit check and review of business records will be conducted by the SBA as part of the application review process
- No need to demonstrate an inability to get credit elsewhere
- No collateral required on loans of less than $25,000
- A fixed interest rate of 3.75%
- 30-year terms
- Full forgiveness if at least 75% of the loan is used for payroll costs (with the remainder to be used against operating expenses), and if your current payroll is maintained for at least 8 weeks further to the loan origination date
- For organizations in need of immediate assistance, there’s also the opportunity to request a forgivable advance of up to $10,000, which will be paid within three days of the loan being approved.
The eligibility criteria follows the same standards as the PPP, namely: the program is open to 501 Veteran organizations, employee-owned cooperatives, private non -profits, tribal businesses, independent contractors and self-employed persons, along with entities that either employee fewer than 500 workers, or qualify as a small business under the guidelines of the SBA Size Standards.
How to Apply for the Economic Injury Disaster Loan in Mississippi
To apply for the EIDL in Mississippi, an application should be made directly via the SBA website. The application has been simplified to take no more than around 2 hours to complete. Be prepared to sign a declaration confirming both your eligibility and the accuracy and truthfulness of any information provided, along with details relating to the business activities and payroll, owner information if another individual or entity has at least a 20% stake in the business, and any applicable criminal history or federal interactions.
Just prior to submitting the application, you’ll be asked whether you’d like to take advantage of a forgivable advance of $10,000. If you do, you’ll need to enter details of the bank account into which you’d like the grant to be paid. If any assistance in completing the application is required, the SBA recommends reaching out to a local Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter. To find a full list of all resources available to applicants in Mississippi, visit the SBA’s directory at this site.