PAYCHECK PROTECTION PROGRAM
The CARES Act establishes a new $349 billion Paycheck Protection Program. The Program will provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed. This unprecedented public-private partnership will assist small businesses with accessing capital quickly. The goal is to position lenders as the single point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level.
The legislation provides small business job retention loans to provide eight weeks of payroll and certain overhead to keep workers employed. The expectation is to have this program up and running by April 3rd so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day. The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses. A list of approved SBA 7(a) lenders can be found
HERE.
The new loan program will help small businesses with their payroll and other business operating expenses. All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.
Of Note
: The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.
Eligibility:
- All businesses, including 501c (3) non-profits
- Veterans organizations
- Tribal concerns
- Sole proprietorships
- Self-employed individuals, and independent contractors
For all, 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
Loan Terms & Conditions:
- Maximum loan amount up to $10 million
- Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the eight weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
All loans under this program will have the following identical features:
· Interest rate of 0.5%
· Maturity of two years
· First payment deferred for six months
· 100% guarantee by SBA
· No collateral
· No personal guarantees
For More Info and To Prepare an Application
:
· For a top-line overview of the program
CLICK HERE
· If you’re a lender, more information can be found
HERE
· If you’re a borrower, more information can be found
HERE
· The application for borrowers can be found
HERE
SBA ECONOMIC INJURY DISASTER LOAN & EMERGENCY GRANT
Overview
The Coronavirus Aid, Relief, and Economic Security (CARES) Act temporarily expands eligibility for SBA economic injury disaster loans (EIDL) and provides an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The
advance does not need to be repaid under any circumstance
, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent, and mortgage payments.
Eligibility
In addition to the entities that are already eligible for SBA disaster loans (small businesses, private non-profits, and small agriculture cooperatives), eligibility is temporarily expanded to include
· Business entities with 500 or fewer employees:
· Sole proprietorships, with or without employees
· Independent contractors
· Cooperatives and employee owned businesses
· Tribal small businesses
· Private non-profits of any size
Additionally, you must have been in business as of January 31, 2020. Expanded eligibility criteria and the emergency grants are only available between January 31, 2020 and December 31, 2020.
How to Apply
·
You can apply for an EIDL
online
with the SBA.
· When you apply, you can request an emergency grant of $10,000.
· The SBA will provide the grant within three days of receiving your application.
· You will not have to repay the grant, even if your application for a loan is denied.
·
You can visit an SBA resource partner who can help guide you through the loan application process. You can find your nearest Small Business Development Center (SBDC) or Women’s Business Center
here
.
Can I apply for other SBA loan programs?
If you apply for an EIDL and the grant, you can still apply for a Paycheck Protection loan. However, the amount forgiven under a Paycheck Protection loan will be decreased by the $10,000 grant.
More Information
For more information about SBA loan programs, please visit the
Small Business Administration
.
More information about small business programs in the CARES Act can be found on the U.S. Senate Committee on Small Business and Entrepreneurship
website
.
