How to Apply for a Small Business Loan in Montana

Montana

If you’re a small business owner in Montana who’s been impacted by the COVID-19 crisis, you’re by no means alone. According to Gaebler, Montana has 106,789 small businesses, with a significant portion of the state’ workforce employed by a company with 500 or fewer employees. With many of those businesses now facing extremely lean times, the potential impact on the unemployment rate can’t be overstated in Montana.

Although there’ll inadvertently be a bounce-back once lockdown ends, how many businesses that manage to survive until then is a worrying question. In an attempt to address the situation, the government has passed two new SBA loans – the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) – both of which are designed to provide immediate cash support to the organizations who’ve experienced a significant loss of revenue as a result of the crisis. If you’re a small business owner hoping to avail yourself of the support, here’s what you need to know about applying for a small business loan in Montana.

The Paycheck Protection Program

Designed to support with payroll-related expenses such as wages, commission, holiday pay, sick leave, severance pay, retirement and medical benefits, and operating costs such as fixed debts, utilities, mortgage interest payments, and rent, the Paycheck Protection Program offers small businesses the opportunity to apply for a low-interest loan of up to $10 million.

The maximum amount of loan that can be requested depends on the length of time the company has been in operation, along with its average payroll costs. If your company has been in business since Feb 15, 2019, you can request a loan based on your average monthly payroll costs from Feb 15, 2019, thru Jun 30, 2019. If you began operating after this timeframe, you’ll need to base your request on the average monthly payroll costs from Jan 1, 2020, thru Feb 29, 2020.

Paycheck Protection Program Terms

As with any loan, it’s vital to consider the terms before beginning your application. The chief terms of the Paycheck Protection Program to note include:

  • A fixed interest rate of 1%
  • No SBA fees
  • No penalties for early re-payment
  • Automatic payment deferral for the first 6 months (with interest collected from the loan origination date)
  • Loan forgiveness if at least 75% of the funds are used against payroll expenses, with the remainder to be used against fixed operating costs

Paycheck Protection Program Eligibility

As part of your application for the Payment Protection Program, you’ll be asked to confirm your company meets the following eligibility requirements:

  • You have been in operation since at least Jan 31, 2020, and have suffered a temporary loss of revenue as a result of COVID-19
  • You employ fewer than 500 staff OR employ more than 500 workers but are recognized as a small business under the SBA Size Standards
  • You are organized for profit
  • You are independently owned and operated
  • You operate primarily from the United States or contribute significantly to the US economy
  • You are not dominant in your field on a national basis
  • You are also considered eligible if you are a registered 501 Veteran organization, a private non -profit, a cooperative, or a tribal business.

How to Apply for the Paycheck Protection Program in Montana

If you are based in Montana and would like to apply for the Payment Protection Program, you will first need to choose a lender. A list of all approved, participating lenders (which extends to include SBA 7(a) lenders, federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions) can be found here. Once you’ve decided on your preferred lender, download the PPP borrower application form from the SBA website. Submit the completed form together with your business records to your chosen lender.

The Economic Injury Disaster Loan

Like the Payment Protection Program, the Economic Injury Disaster Loan (EIDL) has been created with the intent of supporting small entities suffering a loss of revenue as a result of the crisis. If you have already applied for the Payment Protection Program, you are still eligible to apply for the Economic Injury Disaster Loan on the condition the funds are not used for the same purpose. So, for example, if you have confirmed the Payment Protection Program will be used against payroll expenses, you will be expected to utilize the Economic Injury Disaster Loan for operating costs like rent, fixed debts, utilities, or mortgage interest payments. The maximum loan fund available under the Economic Injury Disaster Loan is $2 million, and, like the Payment Protection Program, your length of time in operation and average payroll costs will be considered when deciding the maximum amount you can claim.

Economic Injury Disaster Loan Terms

When it comes to the EIDL, some of the most important terms to note include:

  • No personal guarantee is needed on loans of less than $200,000
  • The usual SBA requirement to demonstrate you have been unable to get credit elsewhere has been waived
  • An interest rate of 3.75% payable from loan origination, regardless of whether a deferral is requested
  • 30-year loan terms
  • No requirement to provide collateral on loans of up to $25,000
  • A forgivable advance of up to $10,000 (based on $1000 per covered employee) may be requested

Economic Injury Disaster Loan Eligibility

The eligibility criteria for the Economic Injury Disaster Loan falls in line with the requirements of the Payment Protection Program. Note that as you will be asked to self-verify your eligibility during the loan application, it’s important to check you meet the requirements beforehand to avoid any unwanted consequences.

As per the PPP, you will be expected to confirm:

  • You have been in operation since at least Jan 31, 2020, and have suffered a temporary loss of revenue as a result of COVID-19
  • You employ fewer than 500 staff OR employ more than 500 workers but are recognized as a small business under the SBA Size Standards
  • You are organized for profit
  • You are independently owned and operated
  • You operate primarily from the United States or contribute significantly to the US economy
  • You are not dominant in your field on a national basis
  • 501 Veteran organizations, private non -profits, cooperatives, and tribal businesses are also eligible to apply.

How to Apply for an Economic Injury Disaster Loan in Montana

Unlike the PPP (which relies on loan funds being administered by independent lenders), all applications and funds for the Economic Injury Disaster Loan are administered directly by the SBA.

To apply for the EIDL in Montana, visit the official SBA website to create an online application. As part of the process, you’ll need to confirm eligibility, business activities and payroll information, and ownership details. You’ll also be asked to disclose any prior criminal activity or federal interactions. Although the application has been streamlined for ease of use, you may wish to take advantage of the free advice available from local Women’s Business Centers, the SBDC, or SCORE mentorship chapters. A full list of available support centers in Montana can be found. Just prior to submitting the application, you’ll be asked to confirm if you would like to receive up to $10,000 of the loan as a forgivable advance. If you say yes, you’ll receive the advance within 3 days of loan acceptance.

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