How to Apply for a Small Business Loan

As the coronavirus outbreak spreads across the country, thousands of small businesses have seen steep drops in business or even had to close their doors to help stem the tide of infections. The crisis is ongoing, but there's already assistance available to help small businesses stay afloat. As part of the federal response to COVID-19, the Small Business Administration (SBA) is offering $50 billion in loans to small businesses suffering economic losses due to the virus.

“Small- and medium-sized businesses are the lifeblood of the U.S. economy," said David Cameron, head of business banking at City National Bank. “It's without coincidence, one of the first steps the federal government took was to allocate $50 billion of funding to small businesses through the SBA. City National is committed to the success of our communities, and assisting small businesses by guiding them through the process of applying for and securing these disaster relief loans is one of the many ways we support our clients and communities."


A Unique Disaster

The SBA often deploys disaster loan assistance to areas affected by natural disasters, such as the recent tornadoes in Tennessee and the 2019 wildfires in Northern California. But the coronavirus is not a local crisis; it's a global pandemic.

“This is unique because we have a national emergency and the impact on the economy is dramatic," said Mark Morales, SBA loan specialist at City National. “Most small businesses aren't prepared to take a hit of one to two months without income. The SBA wants to get in front of this."

The unique thing about these loans is that they are in addition to any other loan products a business may already have in place. They are not conditional based on current business income. “As a bank, we're still working to take care of our customers with all the conventional products, but the SBA disaster program is in addition to that," Morales said. “It's intended to bridge the gap until everyone gets back to normal. The bank may not be able to loan money to a business that isn't earning money right now, but the SBA can."


Getting the Funds

Small businesses that qualify for SBA disaster loans during the COVID-19 crisis can each borrow up to $2 million at 3.75 percent (2.75 percent for nonprofits). While these are not grants, and businesses will have to repay what they borrow, they can do so over a lengthened term of up to 30 years.

The funds can be used to pay rent, payroll, business debts and other bills. Morales recommends that business owners use the loans like they would use business interruption insurance.

For example, say a California-based business has experienced an extensive drop in sales since early March. That business may get a $500,000 SBA disaster loan to smooth out operations until July. While the business may have the option to pay the loan back over 30 years, it can choose to pay it back in full at any time with no penalty.

Perhaps best of all, applying for a disaster loan through the SBA is a simple, three-step process conducted entirely online.


We're Here To Help

Navigating times of economic uncertainty can feel overwhelming, but the City National team is ready to help. If you want more information about SBA disaster relief loans, we can provide support by guiding you through the process of applying for and securing a loan.

Loans and lines are subject to credit and property review and approval. Additional terms and conditions apply. Not all applicants will qualify. Home equity lines of credit are not available in Texas.

This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.

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