Arkansas small businesses now eligible for Economic Disaster Loans

On March 20, 2020, the SBA  added Arkansas to the list of states recognized as disaster areas due to the spread of COVID-19. Because of that declaration, small businesses can now apply for low-interest, “economic injury” disaster loans to help stay afloat during the economic downturn.­­                                                                                                                                        ­­­­

What are Economic Injury Disaster Loans?

A pandemic can strain a small business's financial capacity to make payroll, maintain inventory, and respond to sudden drops in the market.  The United States Small Business Administration (“SBA”) works with state governors to provide loans to support small businesses in times of economic disaster. A small business, small agricultural cooperative, small business engaged in aquaculture, or private non-profit organization may borrow up to $2 million for economic injury caused by COVID-19. The interest rate is 3.75% for small businesses and 2.75% for non-profits.

What is a Small Business?

 The SBA and other federal programs use a size standard, which is usually stated in number of employees or average annual receipts. The definition of "small" varies by industry, but the SBA has provided a very helpful tool that businesses can use to determine whether they qualify.

Can the SBA Keep Up?

Demand for SBA disaster loans is surging to an unprecedented level. SBA has prepared and supported loan operations to expedite the loan application process and increase resources to process loans applications on a first come first serve basis. There is a likelihood that additional resources will be provided to SBA disaster loan funding and processing, as the loans are critical to keeping small businesses afloat. Additionally, some of the ordinary regulatory requirements for SBA lending may be relaxed to facilitate getting funding to businesses that need it.

How Does the Process Work?

Historically, the application process has typically taken about four weeks. The sooner a business applies, the sooner the SBA will consider the application. A business should not count on the money until its loan has been approved. 

Apply for the loan.

There are three ways to submit your application for a loan: online or  by mail. If you apply online, have the following information ready:


  • Contact information for all applicants
  • Social security numbers for all applicants
  • Schedule of Liabilities
  • Insurance information
  • Financial information (e.g. income, account balances and monthly expenses)
  • Employer Identification Number (EIN) for business applicants


If you are applying by mail, the fillable PDF of the application for the SBA loan can be found here.

 No matter which way you decide to apply, you will need the following documentation for SBA to begin processing your application:


  • Business Loan Application (SBA Form 5) completed and signed by business applicant.
  • IRS Form 4506-T completed and signed by Applicant business, each principal owning 20% or more of the applicant business, each general partner or managing member and, for any owner who has more than a 50% ownership in an affiliate business. (Affiliates include business parent, subsidiaries, and/or businesses with common ownership or management).
  • Complete copies, including all schedules, of the most recent Federal income tax returns for the applicant business; an explanation if not available.
    • 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 is acceptable.
  • Personal Financial Statement (SBA Form 413) completed, signed and dated by the applicant (if a sole proprietorship), each principal owning 20% or more of the applicant business, each general partner or managing member.
  • Schedule of Liabilities listing all fixed debts (SBA Form 2202 may be used).


Loan Processing, Closing & Disbursement


Once you have submitted your application and additional documents to SBA, ordinarily it would take 2-3 weeks for the loan officer to reach a decision.

 You will receive Loan Closing Documents to sign. Once SBA has received those documents, an initial disbursement of $25,000 will be made to you within 5 days.  In under a month, your business could receive low-interest loan funds to help it pay fixed debts, payroll, accounts payable, and other bills that cannot currently be paid because of COVID-19’s impact.


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 If you would like to speak to one of our attorneys about applying, please contact Natalie Ramm or T.J. Lawhon.

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