None of this should suggest that borrowers avoid these credits. In today`s credit environment, where it is difficult to obtain low-cost unsecured loans, these loans will undoubtedly save some businesses. But remember that the SBA is doing what it can to protect the lender — in this case, it is the U.S. government. “Without the SBA`s prior written agreement, the borrower will not distribute the borrower`s assets or give preferential treatment, directly or indirectly, to an advance by a loan, gift, bonus or any other way to an owner or partner or employee or to a company controlled directly or indirectly, related to the borrower or another business.” Millions of small business owners who received a loan under the Economic Injury Disaster Loan (EIDL) program were discharged to be approved by the Small Business Administration (SBA) for one of these low-interest loans. But some experienced borrowers, who have carefully checked their loan contracts, have objected to seemingly incriminating provisions imposed on borrowers, including confusing and contradictory language about personal guarantees. Lenders often need guarantees for small business loans. And SBA loans generally require guarantees, although this requirement has been waived for small FDI loans linked to Covid-19. The EDI agreement requires each borrower who accepts a loan of more than $25,000 to complete a full list of guarantees: “For all loans over $200,000, there is a separate guarantee document in which the organization`s client signs his or her individual capacity and there is an additional guarantee paragraph in the authorization and credit agreement. These are not included in loans under $200,000. The SBA is available to all small businesses across the country and has no cap on loan amounts; any small qualified business can apply for a loan of up to $2 million to support the economic recovery. There are no territorial or state restrictions. No, if insurance revenues are paid to the business after the loan is financed, that revenue would be used to repay the disaster loan.
“I have received your request and asked for clarification on certain conditions of the authorization and the credit agreement. It is important to note, when reading the agreement, that the conditions apply only to the borrower identified in this specific agreement as [the name of the company] and not as an officer`s name. The note, the terms of the guarantee agreement and the credit authorization agreement must be read in relation to the company or organization that recognizes and accepts the terms, not on the terms and not for individuals for loans under $200,000. Since the publication of our first tender on March 25, the demand for FDI loans has been record. We know from the SBA website and other reports that the SBA has exhausted the funds initially available for EDI loans. In response, Congress passed on April 24 and President Trump signed an interim aid plan for coronavirus, which included continuing to fund the $60 billion eidl program.