How to Apply for a Small Business Loan in Missouri

Small businesses dominate the US market, representing the vast majority of all independent companies and employing over half the workforce. So, what happens when those same companies suddenly start going out of business in their droves? In Missouri at least, nothing good. Since the COVID-19 pandemic began tightening its grip, more and more small businesses have fallen victim to the economic downturn. And that, in turn, means more and more workers are finding themselves out of work and at the mercy of the Unemployment Benefits program While a silver lining to the crisis is still wishful thinking, there is, at least, help for those who know where to find it. Since the introduction of the CARES Act on March 27, small businesses struggling to meet their outgoing labor and operating costs have been invited to apply for support in the shape of two new SBA loans – the Payment Protection Program and the Economic Injury Disaster Loan. If you’re a business owner struggling to keep afloat, here’s how to apply for a small business loan in Missouri.

What You Need to Know About the Paycheck Protection Program

First up, the Paycheck Protection Program. Designed to provide a quick cash flow injection to small businesses throughout the US, the program supports with employee-related expenses such as salaries, commission, holiday pay, sick leave, severance, retirement benefits, and medical benefits, along with fixed outgoing costs like debts, utilities, mortgage interest payments, and rent. Loans can be requested at 2.5 times the average monthly payroll costs, up to a maximum of $10 million. If the business was in operation between Feb 15, 2019, and Jun 30, 2019, the average monthly payroll costs for the same period will be considered in deciding the maximum amount of loan that can be taken. If it began operating after this period, the average monthly payroll costs from Jan 1, 2020, to Feb 29, 2020, will be considered.

In terms of the loan terms, those of chief note include a low, fixed interest rate of 1%, zero SBA fees, no penalties for early re-payment, and automatic payment deferral for the first 6 months (although note that interest will begin accruing from the loan origination). Depending on how you use the funds, you might be able to apply for loan forgiveness – however, as Forbes notes, this is conditional on the funds being used to cover payroll and other crucial costs over an eight-week period.

The Eligibility Requirements for the Paycheck Protection Program

The PPP is by no means a free-for-all. Before you apply, make sure you meet the following eligibility requirements:

• The business began operating prior to Jan 31, 2020 and has been adversely impacted by the COVID-19 pandemic
• The company employs no more than 500 workers OR employs more than 500 workers but is classed as a small business under the SBA Size Standards
• The business is a registered 501 Veteran organization, a private non -profit, a cooperative, or a tribal business

The SBA also stipulates that all organizations meet the following conditions:

• Are organized for profit
• Are independently owned and operated
• Have a primary place of operation in the United States or contribute significantly to the US economy
• Are not dominate in their field on a national basis

How to Apply for the Paycheck Protection Program in Missouri

Regardless of state, all applications for the PPP must be made directly through an approved SBA 7(a) lender, a federally insured depository institution, a federally insured credit union, or a Farm Credit System institution. If you need assistance in finding a local lender, consult the directory. The next step after finding your preferred provider is to complete the PPP borrower application form (available for download from the SBA website). You then need to submit the completed form, along with all supporting documents requested, directly to your chosen lender.

What You Need to Know About the Economic Injury Disaster Loan

Next up, the Economic Injury Disaster Loan (EIDL). Like the PPP, the Economic Injury Disaster Loan is administered by the SBA and is intended to relieve the pressure on small companies struggling to meet their usual expenses as a result of the COVID crisis. Loans are available up to a maximum of $2 million and may be used expressly for the purpose of payroll and operating costs. Organizations are welcome to apply for both the Economic Injury Disaster Loan and Payment Protection Program, but it is expected that the loan funds are used for different purposes (e.g., if the EIDL is used for payroll, the PPP should be used for operating costs).

Some of the most important terms to note include the fact that no personal guarantee is needed on loans of less than $200,000, there is no requirement (as is usually the case with the SBA) to prove an inability to get credit elsewhere, the interest rate for businesses is fixed at 3.75%, repayment is offered on 30-year terms, and no collateral is required on loans of up to $25,000. Do bear in mind that as part of the application, you will need to consent to a credit check and a review of your business records by the SBA. Of particular interest to organizations in need of an immediate source of support is the forgivable advance of up to $10,000, which will be paid upfront in the form of a grant within 3 days of loan approval.

What are the Eligibility Requirements for the Economic Injury Disaster Loan?

The same eligibility criteria applies to the Economic Injury Disaster Loan as does to the Paycheck Protection Program. As such, you’ll need to confirm:

• The business began operating prior to Jan 31, 2020 and has been adversely impacted by the COVID-19 pandemic
• The company employs no more than 500 workers OR employs greater than 500 workers but is classed as a small business under the SBA Size Standards
• The business is a registered 501 Veteran organization, a private non -profit, a cooperative, or a tribal business
• Additionally, it’s expected that the company is:
• Organized for profit
• Independently owned and operated
• Based primarily in the United States or contributes significantly to the US economy
• Not dominate in its field on a national basis

How to Apply for an Economic Injury Disaster Loan in Missouri

Unlike the PPP, all applications for the Economic Injury Disaster Loan should be filed directly at the SBA website. If any assistance in completing the application is required, check the list of local Women’s Business Centers, SBDCs, and SCORE mentorship chapters.