UPDATE 4/1: The application for Paycheck Protection Loans is now available for download at the Treasury Department’s website. Lenders will start accepting applications this Friday, April 3. There is a cap on the amount of funding available, so submit as soon as you can.
Last week Congress passed the $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES Act) and it contains several provisions to aid small businesses. The Small Business Associations’s Economic Injury Disaster Loans (EIDL) I wrote about two weeks ago have been expanded to include a fast-tracked Express Bridge Loan Pilot Program that allows small businesses that already have a relationship with an SBA Express Lender to access up to $25,000 in funding with reduced paperwork and a faster turnaround time. These loans are intended to keep your business afloat until you secure the EIDL loan.
Another notable provision is the Paycheck Protection Program. This is separate from the SBA 7(a) loan programs mentioned above. The point of the PPP is to provide incentive for small businesses to keep employees on the payroll. It will do this in the form of loans of up to $10 million to small businesses employing fewer than 500 people. If 90% of employees who were employed as of March 24 are kept on payroll for 8 weeks the SBA will forgive the portions of the loan used to cover payroll, rent, mortgage interest or utilities. The loan is forgivable up to 100%.
One more thing to note–SBA loans are handled by their lending partners (banks), not the SBA itself. You can apply for the Economic Injury Disaster Loans via the SBA website. The Paycheck Protection Program loans applications will be accepted by banks and financial institutions starting next week. If you don’t already have a good relationship with your bank or other financial institution, now is the time to cultivate that. They are some of the folks that can help guide you through this.
The information provided here is intended to be informative, not prescriptive. As always, please check with your accountant, financial advisor and/or bank to determine if these programs are a the right option for you and your business.