In the midst of increasing economic shortages resulting from COVID-19, the U.S. Small Business Administration has issued a disaster declaration in Iowa, allowing small businesses in the state to apply for low-interest federal loans. 

The declaration applies retroactively, beginning January 31. The SBA estimated Iowa had about 267,000 small businesses in 2018. 

According to a Saturday press release, the declaration follows a federal funding request made by Iowa Gov. Kim Reynolds to the SBA’s Economic Injury Disaster Loan program. Reynolds had also issued a public health disaster emergency, which closed restaurants, bars, gyms, theaters, and adult care facilities, among other organizations to the public. 

Passed by Congress and signed into law March 6, the loans are a part of a $8.3 billion package designed to address the effects of the coronavirus in the U.S. set aside $1 billion to offer $7 billion worth of loans for small businesses in states hit hardest by the pandemic.

In the press release, Reynolds said the declaration would be “vital” in alleviating the financial burden of COVID-19 on small Iowa businesses. She added that she plans on continuing to work with the Trump administration to decrease this impact.

According to the release, SBA loans are now available to small businesses as well as private and nonprofit organizations statewide, offering up to $2 million in assistance toward COVID-19 induced economic injury. The loans will be crucial in assisting Iowa businesses to persist despite temporary revenue reductions caused by the pandemic. 

“These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.” the release stated.

According to the release, interest rates will be 3.75 percent for small businesses applying for these loans and 2.75 percent for nonprofits. SBA offers a variety of loans and repayment methods, terms being determined on a case by case basis. 

Applications can be submitted on the Small Business Administration’s website, and monitored online after submission.

Iowa Representatives Cindy Axne and Abby Finkenauer both had sent letters in mid-March to the Small Business Administration in early March urging the department to clarify how to apply.