With the passing of the $349 billion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Small Business Administration and the Treasury Department are mobilizing banks and other lending institutions to provide funds to small businesses. Reporter Andrew Dieleman tells us about the paycheck protection program and how it will help small businesses…
The Coronavirus Aid, Relief, and Economic Security (CARES) Act establishes a new $349 billion paycheck protection program which will provide financial relief to sustain America’s millions of small businesses and keep workers employed. The program will be available retroactive from February 15, so employers can rehire any recently laid-off employees through June 30. All loan payments will be deferred for six months and loans that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest will be forgiven.
Loan Terms & Conditions
- Eligible businesses: All businesses, including non-profits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
- Maximum loan amount of 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 percent 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
- No borrower or lender fees payable to SBA
Since March 17, SBA has taken the following steps:
- Declared all states and territories eligible for Economic Injury Disaster Loan assistance
- 1-year deferment on Economic Injury Disaster Loans provided due to COVID-19
- Automatic deferment of previous disaster loans for homeowners and businesses through 2020
- Waiver of garnishments through 2020
Visit SBA.gov/Coronavirus for more information on SBA’s assistance to small businesses.
