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The Small Business Administration has approved coronavirus aid for Maryland. How does that help struggling firms?

The U.S. Small Business Administration has issued a “declaration of economic injury” for Maryland in response to the coronavirus pandemic. That makes the state’s small businesses eligible for low-interest loans of up to $2 million.

The declaration was made after Maryland representatives sought immediate help.

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“Maryland small businesses have to make difficult decisions in terms of having to reduce staff working hours, lay off workers, suspend regular business operations, or close down their businesses completely,” according to a letter Thursday from U.S. Sens. Ben Cardin and Chris Van Hollen and the state’s U.S. House delegation to the SBA.

“These decisions affect not only the small business but their workers, families, and communities, who are struggling to stay afloat during this crisis,” the letter said.

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Baltimore Mayor Bernard C. “Jack” Young raised the issue last week in a letter to Gov. Larry Hogan, asking him to seek the designation.

“Many small businesses, in particular the hospitality industry, are already experiencing reductions in their sales and as a consequence are laying off employees,” Young wrote.

The state Commerce Department reached out to the SBA and worked to identify businesses that could benefit from the assistance, a department spokeswoman said. The state had to provide at least five examples of companies that have suffered “significant economic injury” due to the virus.

“With the recent executive order closing restaurants, bars, fitness centers, and theaters, along with the prohibition of gatherings of more than 10 people, several businesses across the state have reported substantial impacts and are in need of immediate financial assistance,” the governor’s office said Thursday in a statement.

The SBA has granted the designation to 31 states, according to its website Friday.

While some Maryland businesses have closed their doors, at least temporarily, others are trying to find a way to keep operating, rather than jeopardizing their future.

“The vines are going to continue growing,” said Matt Riley, general manager of Big Cork Vineyards in Washington County. “We can’t afford to let that go.”

The vineyard, which has 13 full-time employees, is still operating — and selling wine — but has had to put its 22 part-time employees “on hold,” Riley said.

The vineyard is hopeful of securing an SBA loan. The amount will depend on its need and on an a calculation considering the extent of economic injury and other factors.

“We worked quickly with our federal partners to apply for this designation,” Hogan said in his statement. “This program will offer immediate relief to our small business community and help them to remain afloat during this difficult time.”

Here is how the program works:

Who can get a loan?

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The SBA says its program is designed to help small businesses, small agricultural cooperatives and many private, nonprofit organizations “meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster.”

The loans cannot be used to refinance long-term debts.

Applicants must have an acceptable credit history and show the ability to repay the loan.

How do you apply?

Applicants may apply at https://disasterloan.sba.gov/ela or call 800-659-2955 for information. The email address is disastercustomerservice@sba.gov

What’s the interest rate?

According to the SBA, the interest rate is determined by formula and is fixed for the life of the loan. The maximum is 3.75%.

Terms can be as long as 30 years, and the agency says an “appropriate installment payment” will be based on the borrower’s financial condition.

How much can you borrow?

The loans are capped at $2 million, but with a limited exception:

“If a business is a major source of employment, SBA has the authority to waive the $2 million statutory limit,” the agency says.

Is there a lag time?

Some businesses have encountered delays in the process.

“The website is really slow right now,” Riley said. “It’s pretty flooded. It’s taking a long time to access each form. They require a lot of information and I’m currently working with our accountant."

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