Since early March, the government has taken several actions to support US businesses through legislations as well as direct actions by the Federal Reserve and Treasury Department.
This documents focuses on two:
Lenders with delegated authority from SBA, which allows Lenders to determine eligibility and credit worthiness without going through SBA channels.
A Lender must consider whether the borrower:
February 15, 2020 through June 30, 2020
Beginning on February 15, 2020 and ending on June 30, 2020, in addition to small business concerns, any business concern, non-profit organization, veterans organization, individuals who operate as sole proprietors or independent contractors, eligible self-employed individuals, or Tribal small business concern is eligible to receive a covered loan if they employ not more than the greater of
The term employee includes individuals employed on a full-time, part-time or other basis.
The-maximum loan amount under the PP Program is the lesser of:
*Special rules exist for seasonal employers and businesses not in existence beginning 2/15/2019 and ending on 6/30/2019.
Payroll Costs include the sum of payments of any compensation with respect to employees that is a:
Payroll Costs do NOT include:
Payroll Costs include the sum of payments of any compensation with respect to employees that is a:
Payroll Costs do NOT include:
An eligible recipient applying for a covered loan must make a good faith certification that:
Nonrecourse
The administration has no recourse against any individual shareholder, member, or partner of an eligible recipient of a covered loan for nonpayment of any covered loan UNLESS it is used for a purposes not authorized.
No Guarantee
Between February 15, 2020 and ending on June 30, 2020, no personal guarantee is required for the covered loan AND no collateral is required for the cover loan.
No Fees
Between February 15, 2020 and ending on June 30, 2020, with respect to covered loan, the Administrator will not collect a fee.
Between February 15, 2020 and ending on June 30, 2020, the Administration provides complete payment deferment relief for impacted borrowers with a loan for a period of not less than 6 months and not more than 1 year.
An impacted borrower is an eligible receipt who is in operation on February 15, 2020 and has an application for covered loan that is approvjed or pending after the date of enactment.
An individual or entity that is eligible to receive a covered loan is eligible for forgiveness of indebtedness on that loan in an amount equal to the sum of the following costs incurred and payments made during the 8-week period beginning on the date of the origination of a covered loan:
The following must be provided to the Lender:
No eligible recipient shall receive forgiveness without submitting to the lender that is servicing the covered loan the documentation required.
Timing of Loan Forgiveness Decision:
No later than 60 days after the date on which a lender receives an application for loan forgiveness from an eligible recipient, the lend* will issue a decision on the an application.
Taxability
Any amount would be includible in gross income of the eligible recipient by reason of forgiveness is excluded from gross income.
SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses, small agricultural cooperatives, small aquaculture businesses and most private non-profit organizations
This includes:
Credit History – Applicants must have a credit history acceptable to SBA.
Repayment – SBA must determine that the applicant business has the ability to repay the SBA loan.
Eligibility – The applicant business must be physically located in a declared county and suffered working capital losses due to the declared disaster, not due to a downtown in the economy or other reasons.
Eligible entities may qualify for loans up to $2 million.
The interest rates for this disaster are 3.75% for small businesses and 2.75% for nonprofit organizations with terms up to 30 years.
Eligibility for these working capital loans are based on the size (must be a small business) and type of business and its financial resources.
These working capital loans may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. The loans are not intended to replace lost sales or profits or for expansion.
Emergency Grants
Borrowers can receive up to a $10,000 grant within 3 days after applying for an EIDL loan
If the applicant is approved, the applicant is not required to repay the grant
Applicants may apply online using the Electronic Loan Application (ELA) via SBA’s secure website at https://disasterloan.sba.gov/ela.
Paper loan applications can be downloaded from www.sba.gov/disaster. Completed applications should be mailed to:
U.S. Small Business Administration
Processing and Disbursement Center
14925 Kingsport Road
Fort Worth, TX 76155
Disaster loan information and application forms may also be obtained by calling the SBA’s Customer Service Center at 800-659-2955 (800-877-8339 for the deaf and hard-of-hearing) or by sending an email to disastercustomerservice@sba.gov.
Free assistance with reconstructing financial records, preparing financial statements, and submitting the loan application is available from any of SBA’s partners:
For the nearest office, visit: https://www.sba.gov/local-assistance
This content is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.