How to Apply for a Small Business Loan in Nevada

Nevada

When Gov. Steve Sisolak mandated the closure of non-essential businesses in Nevada in April, we knew we were in for a rocky time. Just how rocky has come as something of a shock. Small businesses (i.e. those employing 500 or fewer workers) are the backbone of the US economy, employing more than half of the entire workforce. What happens to those workers if the companies paying their wages suddenly stop operating is unthinkable. In an effort to mitigate some of the effects of the crisis, the government has implemented two new small business loans via the Small Business Administration (SBA). In creating the programs – the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan – the SBA has done away with much of the red tape that can be a barrier to businesses getting the support they need via a standard loan. With a streamlined application process, central administration, and favorable terms, either one could be a lifeline to small businesses in crisis. Here’s what you need to know about how to apply for a small business loan in Nevada.

What is the Paycheck Protection Program?

With a low-interest rate and an option for full loan forgiveness, the Paycheck Protection Program (PPP) has understandably seen a huge uptake since being rolled out in March. Both eligibility and use of the loan are strictly controlled, but for small businesses struggling to keep up with payroll and other crucial costs, it could be the difference between floating and sinking.

What Are the Terms of the Paycheck Protection Program?

The PPP offers loans with a 1% interest up to a cap of $10 million. Bear in mind that the maximum you can borrow is determined by your payroll costs. If the company was in operation between Feb 15, 2019, and Jun 30, 2019, the maximum amount of loan that can be borrowed will be 2.5 times the payroll costs from the same period. Any businesses that were not in operation during this time will have their payroll costs from Jan 1, 2020, and Feb 29, 2020, considered instead.

Other terms to note include:

  • No early re-payment penalties and no loan administration fees
  • 2-year loan terms
  • Automatic 6-month payment deferral (although interest will begin to accrue from loan origination)

Perhaps most interestingly for potential borrowers is the fact that the full principal of the loan and any interest will be eligible for forgiveness if at least 75% of the funds are used to retain the current payroll for at least 8 weeks. As per the SBA, the remainder of the funds should be utilized against other crucial costs such as business rent, business mortgage interest payments on real or personal property, or business utility payments.

What Are the Eligibility Requirements of the Paycheck Protection Program?

Before you can apply for the PPP, you’ll need to make sure that you satisfy the eligibility requirements. As outlined by Investopedia, the PPP is open to:

  • Entities that meet the size requirement (500 or fewer employees for most companies – if over 500, check the SBA Size Standards to see if you still fall into the classification of ‘small business’ by trading type)
  • Tribal businesses
  • Private non-profits
  • 501 Veteran organizations
  • Independently owned franchises
  • Self-employed workers, independent contractors, gig workers, and sole proprietors
  • Additionally, the SBA requires that:
  • The company has been in operation since at least Jan 31, 2020
  • The company can demonstrate adverse effect on revenue as a result of coronavirus
  • The company is organized for profit, and either operates primarily from the US or contributes significantly to its economy

How Can I Apply for the Paycheck Protection Program?

All applications for the Paycheck Protection Program should be made through an existing SBA 7(a) lender, federally insured depository institution, federally insured credit union, or Farm Credit System institutions. A full list of lenders can be found at sba.gov. Although the PPP is administered by the SBA, note that different lenders apply their own standards to the processing of applications. Some small businesses have experienced significant delays in funds being received, so do your homework before finalizing your choice. Be sure to go with a lender you trust, and ask plenty of questions about how many applications they’ve received versus how many loans have been released. If the difference between the two is substantial, find another lender. The next step after choosing a lender is to download and complete the PPP borrower application form from the SBA website. You’ll need to submit this, along with your payroll records, to the lender.

What is the Economic Injury Disaster Loan?

Like the Payment Protection Program, the Economic Injury Disaster Loan (EIDL) is administered by the SBA with the intent of relieving some of the burden on small businesses hit by the crisis. If you’ve already applied for the PPP, you can still apply for the EIDL (and vice-versa); however, you will not be able to use the funds for the same purpose (for example, if you have used the funds from the Payment Protection Program towards wages, you’ll be expected to use the Economic Injury Disaster Loan for operating costs).

What Are the Terms of the Economic Injury Disaster Loan?

The Economic Injury Disaster Loan might not offer quite the same level of funds as the Payment Protection Program (loans are capped at $2 million), but it offers equally favorable terms, including:

  • No personal guarantee for loan amounts of $200,000 or less
  • No collateral for loan amounts of $25,000 or less
  • No administration fees
  • 30-year loan terms
  • A fixed interest rate of 3.75%

Although loan forgiveness is not available in the same way as the Payment Protection Program, the Economic Injury Disaster Loan does come with the very attractive option of a forgivable advance of $1000 per covered employee up to a maximum of $10,000. Essentially, this works in the form of a grant, and will be paid within 3 days of loan acceptance.

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

As with the PPP, the EIDL is open to:

  • Entities that meet the size requirement
  • Tribal businesses
  • Private non-profits
  • 501 Veteran organizations
  • Independently owned franchises
  • Self-employed workers, independent contractors, gig workers, and sole proprietors

How Can I Apply for the Economic Injury Disaster Loan in Nevada?

Unlike the PPP, all applications for the EIDL should be made directly via the SBA website, regardless of state. The SBA has worked to create a streamlined, intuitive application process, but if any assistance is required in completing the application (in which you’ll be asked to verify eligibility, payroll, and business information, and confirm any interactions with the federal government or criminal history), free assistance can be requested from a local Women’s Business Center, SBDC, or SCORE mentorship chapter. The SBA provides details of all local resource centers in Nevada.



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