In the past few weeks, Congress has passed three phases of assistance for Americans in wake of the COVID-19 outbreak.
Phase One (signed by President Trump on March 6th) provided critical upfront assistance to shore up the federal government’s response to the outbreak and provided $20 million for SBA loans and $20 million for SBA operations.
Phase Two (signed into law by President Trump on March 18th) has several provisions including an expansion of required paid sick and medical leave benefits under the Families First Coronavirus Response Act. Read more
Phase Three (signed into law by President Trump on March 27th) is a $2 trillion package and includes a wide array of key provisions. Following are 2 documents that review the $350 billion Paycheck Protection Program, which will provide financial assistance through 100% SBA backed loans.
Paycheck Protection Program
The CARES Act establishes the Paycheck Protection Program, a $350 billion loan program to help small & mid-sized businesses with cash flow during the COVID-19 crisis. If the business maintains their payroll for 8 weeks, the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.
Who is eligible to receive the loans?
• Businesses with 500 or less employees;
• Businesses that meet current SBA size standards;
• Self-employed individuals and “gig economy” workers;
• Certain nonprofits, including 501(c)(3) orgs. and 501(c)(19) veteran orgs.
• Tribal businesses with under 500 employees.
What is the size of the loans?
The maximum loan size is 250% of the employer’s average monthly payroll, or $10 million (whichever is less).
What can loans be used for?
• Payroll costs (salary, wages, and payment of cash tips up to annual rate of $100,000 per employee);
• Continuation of health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
• Employee salaries, commissions, or similar compensations;
• Payments of interest on mortgage obligations;
• Rent, including rent under lease agreement;
• Utilities
• Existing allowable uses under 7(a) program, which includes purchasing inventory, supplies, raw materials, and working capital.
