Small Business Coronavirus (COVID-19) Disaster Relief Assistance Loans

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Here at Massey, Stoster & Nichols, PC, we understand how many small businesses and non-profits have been financially impacted by the Coronavirus (COVID-19) disaster and are here to help provide information and resources available to such small businesses and non-profits. We know you may have several questions involving COVID-19. That is why our attorneys have compiled the below information related to disaster relief assistance loans available to many small businesses and non-profits in Alabama.

SBA Disaster Relief Loan Basics

In response to the Coronavirus (COVID-19) outbreak, the federal government and many states, including Alabama, have developed paths towards economic relief for small businesses. On March 12, 2020, the U.S. Small Business Administration (SBA) announced that it will be offering federal disaster loans for working capital to small businesses that have sustained impacted substantial economic injury as a result of the coronavirus (COVID-19). Because small businesses makeup the backbone of Alabama’s economy, Governor Kay Ivey has announced that Federal disaster loans will be available to small businesses and nonprofits in Alabama.

Does Your Business or Nonprofit Qualify for a SBA Economic Injury Disaster Loan?

In response to the Coronavirus (COVID-19) outbreak, the SBA has made Economic Injury Disaster Loans (“EID Loans”) available for qualifying businesses that have suffered economic injury as a result of the epidemic. Small businesses suffering from the economic downturn caused by the coronavirus outbreak can apply for Economic Injury Disaster Loans (EIDLs) to meet outstanding expenses and obligations. Both small businesses and nonprofits can apply for the loans.

If you own a small business, small agriculture cooperative, small aquaculture business or a private non-profit organization that has been directly or indirectly affected by the disaster, you may be eligible to apply for an EID Loan.

Before being approved for an EID Loan, the SBA will consider whether the following criteria:

  • Credit History – The SBA will consider whether your small business or non-profit has an acceptable credit history.
  • Repayment – The SBA must determine that your small business or non-profit has the ability to repay the EID loan.
  • Eligibility – Your small business or non-profit must be physically located in a declared county and suffered working capital losses due to the declared disaster.

What Are the Terms of the SBA’s Economic Injury Disaster Loans?

The SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can be paid over as much as 30 years, according to the federal Small Business Association (SBA). SBA says the payment rate is 3.75% for small businesses and 2.75% for nonprofits.

The loans can be used to pay fixed debts, payroll, accounts payable and other expenses that are difficult to pay during the coronavirus outbreak. Eligible small businesses and non-profits make also use the loan funds to pay other bills that could have been paid had the Coronavirus (COVID-19) disaster not occurred.

Small businesses and non-profits will only have to offer up collateral if borrowing over $25,000.00. The SBA will not decline a loan for lack of collateral, but does require borrowers to pledge what is available. Applicants can have an existing SBA Disaster Loan and still qualify for an EIDL for this disaster, but the loans cannot be consolidated. There is no cost to apply. There is no obligation to take the loan if offered.

How To Apply for a SBA Economic Injury Disaster Loan.

Applicants do not go through a bank to apply. Instead apply directly to SBA’s Disaster Assistance Program. Although paper applications and forms are acceptable, filing electronically is easier, faster, and more accurate.

Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website at

Paper loan applications can be downloaded from Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.

The documents required when submitting an application are:

  • Completed SBA loan application (SBA Form 5 or 5C).
  • Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates.
  • Complete copies of the most recent Federal Income Tax Return.
  • Schedule of Liabilities (SBA Form 2202).
  • Personal Financial Statement (SBA Form 413).

Other information that may be requested:

  • Complete copy, including all schedules, of the most recent Federal income tax return for principals, general partners or managing member, and affiliates (see filing requirements for more information).
  • If the most recent Federal income tax return has not been filed, a year-end profit-and-loss statement and balance sheet for that tax year.
  • A current year-to-date profit-and-loss statement.
  • Additional Filing Requirements (SBA Form 1368) providing monthly sales figures.

Birmingham Strong Small Business Loan Basics

In addition to the SBA Economic Injury Disaster Loan, small business owners in Birmingham have another opportunity to receive an emergency loan through Birmingham Strong.

Birmingham Strong is a loan fund for those facing layoffs or other major financial burdens from Coronavirus (COVID-19) related closures.

The loan fund is operated by the Community Foundation of Greater Birmingham. The Birmingham City Council approved $1 million for the loan fund. An additional $200,000 from Birmingham’s Office of Innovation and Economic Opportunity is expected to be approved for the fund.

Does Your Business Qualify for a Birmingham Strong Small Business Loan?

Licensed for-profit businesses with fewer than 50 employees within the Birmingham city limits that have been operating for at least one year are eligible for the Birmingham Strong Small Business Loan.

The Birmingham Strong Small Business Loan must be used to in payroll or to avoid staff cuts, maintaining business operations or funding a business model reconfiguration in response to COVID-19.

Applicants will be judged on certain criteria, including:

  • the business impact on neighborhood and community;
  • the adaptability, innovation and responsiveness to COVID-19;
  • on fiscal strength and operational stability;
  • on historic contributions to the City of Birmingham as an employer and business; and
  • on the ability to maintain operations and make payroll while limiting staff reductions.

What Are the Terms of the Birmingham Strong Small Business Loan?

Loans of $10,000 to $25,000 are available under the Birmingham Strong Small Business Loan. Four loan sizes: one $25,000, $20,000, $15,000, or $10,000 per business. The loans are interest-free for 180 days. After that, a 24-month payment plan begins.

The repayment structure of the Birmingham Strong Small Business Loan is as follows:

  • $25,000: 3% interest after 180 days
  • $20,000: 3.5% interest after 180 days
  • $15,000: 4.0% interest after 180 days
  • $10,000: 5.0% interest after 180 days

How To Apply for a Birmingham Strong Small Business Loan.

Applicants need to apply at The deadline for the first round of applications is 11:59 PM CDT March 27. Businesses will be notified on April 3 if their loan application was approved or rejected. Loan documents will be signed and checks disbursed from April 6 to 15.

The documents required when submitting an application are:

  • A written application;
  • For Guarantors: (anyone with 20% or more ownership of the business)
  • Copy of driver’s license
  • Personal financial statement
  • Most recent Federal tax return
For the Businesses
  • Federal tax returns for the past two years (unless the business is only one year old)
  • 12/31/2019 Year-end financial statements (balance sheet and income statement)
  • Interim financial statements dated within the last 90 days
  • Supporting documents to statement of need outlined in the application
  • Copy of 2019 Birmingham Business License
  • Current bank statement

Need Additional Help?

We at Massey, Stotser & Nichols understand that this can be a crazy time and we are here to keep you informed and up-to-date on the latest laws and resources surrounding the Coronavirus (COVID-19) disaster.

In addition to helping you and your small business and/or non-profit with applying for a disaster loan, we have talented attorneys that can also help and advise you regarding all of your needs during this time. If you have any questions regarding COVID-19 and your obligations as an employer, please do not hesitate to contact us.

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