Relief for Small Business due to COVID-19
Small Business Interruption Loans – CARES ACT
Under the recently passed “CARES” Act, the federal government is implementing a loan program through the Small Business Administration to provide “interruption” loans to small businesses. Here is what you need to know:
1. Any business with fewer than 500 employees can apply.
2. The business does NOT need to be shut down completely or partially.
3. No personal guarantees or liens are required.
4. The maximum loan amount will be 2.5 times your average payroll cost over the 1-year period before the loan is taken.
5. You will need to apply through approved banks or credit unions (start with your current bank).
6. Loan proceeds can be used for payroll costs, interest (not principal) on mortgages, rent, utilities, and interest (not principal) on debts incurred before February 15, 2020.
7. Repayment will be deferred at least six months and up to a year at the discretion of the bank.
8. The portion of the loan used for the following expenses during the 8-week period beginning on the loan origination date will be forgiven (You don’t have to pay it back!). This may have tax implications.
- b. Interest (not principal) on business debts incurred prior to February 15, 2020
- d. Utilities – including electricity, gas, water, transportation, telephone and internet
9. Loan forgiveness will be reduced by any reduction of employees from the period of February 15, 2020 – June 30, 2020.
10. We recommend contacting your bank about these loans TODAY!
Disaster Loans – Separate from the CARES Act
This program has traditionally been used for help after a natural disaster. However, these loans are open to businesses and non-profits impacted by COVID-19. Here is what you need to know:
1. The loans are available for businesses unable to meet its obligations and necessary operating expenses.
2. The maximum loan is $2 Million and the interest rate will be 3.75%.
3. The loan can be repaid over as many as 30 years but the ability to pay will determine the repayment period.
4. To qualify a business will need to show good credit history and the ability to repay.
5. These loans come directly from the U.S. Treasury and should be applied for at sba.gov.
6. You can begin the loan application process immediately.
For more information, please contact your bank or the SBA.
