Updated: Oct 5, 2020
With the passing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, small businesses and nonprofits affected by the coronavirus pandemic now have access to low-interest federal disaster loans through the Small Business Administration (SBA).
As historically established by the SBA, the small business designation still includes traditional smaller sized operations, sole-proprietors, independent contractors and other self-employed individuals of and there are programs specific to these entities. To find out if you qualify as a small business, please use the SBA Size Tool on the SBA website.
Here is a quick breakdown of some of the loan programs available:
The Paycheck Protection Program (PPP)
This program provides assistance to organizations committed to keeping workers employed amid the pandemic and economic downturn. Additionally, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
Eligible loan recipients may receive up a loan of up to $10 million, which is based upon two and a half times the average total monthly gross payments for payroll costs generally incurred during the 1-year period (January 1, 2019 – December 31, 2019), adjusted for certain program guidelines, and limited to a maximum compensation per employee of $100,000.
While the PPP application may be available to complete, you will need to work with your banking relationship manager with application processing and submission. In the meantime, loan applicants will likely be required to provide supplemental documents when submitting their PPP loan application, which may vary by lender.
For more information, please visit the Paycheck Protection Program Resource Guide on the SBA website.
Economic Injury Disaster Loan Program
Qualifying business for the Economic Injury Disaster Loan (EIDL) program can receive up to $2 million in loans to be used for working capital and ordinary expenditures. In addition, small businesses and nonprofits could be eligible for a $10,000 emergency grant that does not need to be repaid. Small businesses and nonprofits are precluded from receiving SBA funding under the Paycheck Protection Program and an Economic Injury Disaster Loan (EIDL) for the same purpose.
Loans under the PPP or EIDL Programs are third-party loans with SBA guarantees. Applications are made directly through a participating lending institution. More information about the programs or lists of participating institutions can be found at www.sba.gov.
If you have questions about any of these programs, please contact Time Capital Solutions or your banking partner for more information.
About the Author: