What You Need to Know about the SBA Coronavirus Relief Options
On Friday, March 27, 2020, the President signed into law the CARES Act, which contains $376 billion in relief for American workers and small businesses. In addition to traditional SBA funding programs, the CARES Act established several new temporary programs to address the COVID-19 outbreak. These programs include the Paycheck Protection Program, the EIDL Loan Advance, the SBA Express Bridge Loan and SBA Debt Relief.
Below is an explanation of how the PPP can help your business pay employees, rent and utilities during this time. NHLA encourages you to take advantage of these programs.
Read the information below, visit the SBA website and call your bank to get the process started as PPP will only be available until June 30!
The PPP is not limited to $10,000. Businesses can get up to 2.5 times their total monthly payroll (with a maximum of $10 million).
SMALL BUSINESS PAYCHECK PROTECTION PROGRAM
The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs, including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Must Keep Employees on the Payroll—or Rehire Quickly
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
All Small Businesses Eligible
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.
How Much Money Can Small Businesses Get?
Businesses can get up to 2.5 times their total monthly payroll (with a maximum of $10 million). Importantly, as many businesses have already slashed jobs, companies will rely on payroll numbers from before the crisis. The Small Business Administration has set an interest rate of 1% on the loans, and repayment will be deferred for six months.
How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of the lender or borrower. A list of participating lenders, as well as additional information and full terms, can be found at www.sba.gov.
The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Lenders should also visit www.sba.gov or www.coronavirus.gov for more information.
Demand for these funds will be stiff. It is recommended that you contact your accountants and lending institutions as soon as possible to prepare for application.
Guidance from the Small Business Administration is available HERE.
Additional information for borrowers can be found Here and an application can be found Here.
Need guidance, assistance, or help? Please contact NHLA by clicking here!