How to Apply for a Small Business Loan in Nebraska

Nebraska

Although Nebraska seems to have weathered the COVID-19 storm better than a number of other states, its unemployment rates have still risen and its businesses are still having to pull in their belts by several notches to survive. Finding any kind of silver lining in the crisis is mission impossible, but there is, at least, support – providing you know where to look. Small business loans are notorious for their red tape and rigmaroles, but fortunately, there’s now an alternative. On March 27, the government introduced two new small business loans as part of the CARES Act. Administered by the SBA, the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan are intended to provide some much-needed support to those organizations who’ve been financially impacted by the crisis. Granted, the program hasn’t been without its problems – funds for both schemes have already been exhausted and replenished several times, and the backlog in applications is resulting in lengthy delays in payments being received. All that said, it’s still a valuable tool – and a potential lifeline for companies that are feeling the pinch. If you own a small business, here’s how to start your application for a small business loan in Nebraska.

What is the Paycheck Protection Program?

In brief terms, the Paycheck Protection Program (PPP) is a low-interest loan designed to support small entities struggling to cover outgoing costs as a result of the pandemic. Use of the funds is strictly controlled, and recipients are expected to use the loan towards the specific purpose of payroll and operating costs only.

Loans are available up to a maximum of $10 million, but your actual entitlement will be determined by your usual payroll costs. To calculate how much you can apply for, look at your payroll costs from Feb 15, 2019 to Jun 30, 2019: the maximum you can apply for will be 2.5 times this. If your business wasn’t in operation during this period, consider the average monthly payroll costs between Jan 1, 2020, and Feb 29, 2020, instead.

What Are the Terms of the Paycheck Protection Program?

Other than a very attractive low-interest rate of 1% and no SBA fees, the Paycheck Protection Program comes with the following terms:

  • No early re-payment fees
  • Payment deferral for the first 6 months from loan origination (note that interest will begin to accrue from day one)
  • The possibility for loan forgiveness if 75% or more of the funds are used for payroll, and the remainder is used against other crucial costs

What Are the Eligibility Requirements of the Paycheck Protection Program?

The PPP is intended for only a limited number of companies: namely, those that have been around since at least Jan 31, 2020, and can demonstrate an adverse financial impact from the pandemic. Additionally, eligibility is limited to:

  • Companies with less than 500 workers OR that qualify as a small business under the SBA Size Standards
  • Companies that are organized for profit
  • Companies that are independently owned and operated
  • Companies that operate primarily from the United States or that offer a significant contribution to its economy
  • Companies that are not dominant in their field on a national basis
  • The program is also open to registered 501 Veteran organizations, private non -profits, cooperatives, and tribal businesses.

How Can You Apply for the Paycheck Protection Program in Nebraska?

Although the Paycheck Protection Program is administered by the SBA, all applications are made via local, approved lenders (including existing SBA 7(a) lenders, federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions). As some lenders are timelier in their loan processing than others (not to mention more amenable to offering loans on the lower end of the spectrum, ask plenty of questions before you decide which lender to go with. Check the number of applications they’ve approved (ideally it should be as close to 100% as possible) and how quickly they’ve released the funds. If you need any assistance in finding a lender, the SBA issue a useful directory at sba.gov. After deciding on your preferred lender, the next step is to download and complete the PPP borrower application form from the SBA website. This should then be submitted to your chosen lender together with your payroll information.

What is the Economic Injury Disaster Loan?

In many ways, the Economic Injury Disaster Loan (EIDL) is very similar to the Payment Protection Program. Both loans are administered by the SBA, both loans are intended to support with payroll and operating expenses, and both have the same basic eligibility requirements. Depending on the extent of your needs, it’s worth bearing in mind you are welcome to apply for both the Economic Injury Disaster Loan and the Payment Protection Program. However, you should note that if you do, you will be expected to use the funds for different purposes (e.g., if the PPP is used for payroll, the EIDL should be used for operating costs).

What Are the Terms of the Economic Injury Disaster Loan?

The EIDL is capped at $2 million, and comes with the following terms:

  • No requirement for a personal guarantee on loans up to $200,000, and no collateral needed on loans up to $25,00
  • No requirement to show an inability to get credit elsewhere
  • No SBA fees
  • 30-year loan terms with a fixed interest rate of 3.75%
  • The option to request a forgivable advance of $1000 per covered employee up to a max of $10,000

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

The EIDL comes with the same eligibility requirements as the PPP; namely, it’s open to:

  • Companies with less than 500 workers OR that qualify as a small business under the SBA Size Standards
  • Companies that are organized for profit
  • Companies that are independently owned and operated
  • Companies that operate primarily from the United States or that offer a significant contribution to its economy
  • Companies that are not dominant in their field on a national basis

How Can You Apply for the Economic Injury Disaster Loan in Nebraska?

If you are based in Nebraska and would like to apply for the Economic Injury Disaster Loan, you will need to apply via the SBA website. Expect to provide information relating to business activities, payroll, and ownership. You will also need to disclose if the company has any criminal history. Should you require any assistance in completing the application, it’s worth taking advantage of a free consultation at a local Women’s Business Center, SBDC, or SCORE mentorship chapter. Visit this site for a directory of all centers in Nebraska.


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