Small-business owners across Texas are now able to apply for up to $2 million in long-term, low-interest Economic Injury Disaster Loans, Gov. Greg Abbott announced Friday.
“Small businesses are the foundation of our state’s economy and they need all the help they can get as the ripple effects of COVID-19 impact their everyday operations,” Abbott said in a statement.
Abbott said the U.S. Small Business Administration’s decision is "a vital lifeline for Texas small-business owners who are doing their best to adapt to these trying times.”
For the past week, the state has been working with the SBA to survey businesses to demonstrate a need for the aid. Local measures limiting gatherings amid the spread of COVID-19 have led to event cancellations, retail storefront closures and stark decreases in sales at bars and restaurants. Business owners have been sounding alarms about dire consequences bearing down on them.
Alberto Lombardi, a Dallas restaurateur who operates 16 restaurants and employs 750 people, said this week that he’d have to lay off “at least 600 or 700 people” by March 21 if the government didn’t provide relief for small businesses.
“The thing is, everybody, every restaurateur, needs to figure out how to come out of this and stay in business,” he said.
Of course, small business owners have to pay back their loans. Erin McKool, who owns two healthful drive-thrus called Start restaurant in Dallas, closed her shops on March 18. She says she’d rather close two restaurants and reassess her business in four to eight weeks than apply for a loan and be saddled with the interest later.
The loans carry an interest rate of 3.75% for small businesses without credit available and 2.75% for nonprofits. They can be used to cover payroll, fixed debt, accounts payable and other bills.
The SBA previously told The Dallas Morning News that it works to process applications “as quickly as possible” and that loan processing typically takes two to three weeks. Funds are disbursed within a few days after the SBA receives signed loan closing documents.
The state is encouraging small businesses to apply for the loans online to ensure a speedy process. The state stressed that the online application is the quickest method for determining a company’s eligibility.
How the SBA defines a small business differs across industries. For example, a full-service restaurant making up to $8 million in average annual revenue qualifies, according to the SBA.
