How to get a small business loan under the $349 billion aid bill
NAPA Owners,
The $2 trillion federal coronavirus relief package signed last week, officially known as the CARES Act, includes nearly $350 billion for a small business loan program called the Paycheck Protection Program. The program is designed to get cash into the hands of suffering small businesses quickly, with less red tape and fewer guardrails than the SBA’s existing loan programs. It is designed to incentivize business owners to keep employees on the payroll by offering them loan forgiveness.
You may be eligible for a Paycheck Protection Program loan under the new federal legislation designed to provide small businesses quick access to capital for payroll and other overhead costs.
Here’s what you need to know about the program, which was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This is based on the latest information from the Small Business Administration (SBA). Other eligibility requirements may apply.
The Payment Protection Plan loan will be generally available to companies with 500 employees or less, individuals who operate under a sole proprietorship as well as 501 (c) (3) non-profit organizations, 501 (c) (19) veterans organizations, and some Tribal business concerns.
It expands eligibility under the SBA 7a program to help businesses cover costs related to payroll (including healthcare related costs), rent, mortgage interest, interest on existing debt, and utility payments.
You can apply for this only online - the application has been posted on the Treasury Department’s CARES Act resource page as of Tuesday afternoon. After you gather the information described on the application form you should contact your bank or an approved lending institution to start the application process.
You must confirm that your business needs financial relief because it was impacted by Coronavirus events.
It will require no collateral or personal guarantees.
Generally the loan amount will be based on 2.5 times your average monthly payroll costs.
You may be eligible to have all or a portion of the loan principal forgiven based on SPA rules.
You won’t have to make payments on the loan for at least six months.
The interest rate will be no more than 4% and likely no longer than 10 years. The terms may change during the application process.
We will continue to post information as it becomes available.