Stimulus CARES Act Establishes a New $349 Billion
Paycheck Protection Program
Following President Trump’s signing of the historic Coronavirus Aid, Relief, and Economic Security (CARES) Act, the SBA and Treasury Department have initiated a new $349 billion Paycheck Protection Program. The Program will provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed. This legislation provides small business job retention loans to provide eight weeks of payroll and certain overhead to keep workers employed.

Beginning April 3rd , businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day.  The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses.

The program will provide capital to businesses without collateral requirements, personal guarantees, or SBA fees. All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.

LOAN TERMS & CONDITIONS:

  • 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 are eligible.
  • Maximum loan amount up to $10 million
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)

All loans under this program will have the following identical features:
o  Interest rate of 0.5%
o  Maturity of 2 years
o  First payment deferred for six months
o  100% guarantee by SBA
o  No collateral
o  No personal guarantees
o  No borrower or lender fees payable to SBA
T he Paycheck Protection Program is specifically designed to help small businesses keep their workforce employed. Visit  SBA.gov/Coronavirus  for more information on the Paycheck Protection Program. Visit treasury.gov/cares  for more information on SBA’s assistance to small businesses.