I know we have a lot of business owners. We will see how this works out. Hope this can help someone meet payroll and rent and be eligible for loan forgiveness. Steve Munuchin will likely be the loan czar if the GOP plan passes so it is totally up to him on who gets what (some speculation here).
COVID-19 has created a new normal for most of us--and especially for those among us who own a small business. If you’re the owner of a small business and you find yourself in a situation where you need relief, you’ll be glad to know that legislators are currently working through the details of a program that could help. It’s called the Paycheck Protection Program approved by the U.S. Senate as part of the Coronavirus, Aid, Relief and Economic Security act or “CARES” act to help support small businesses. Here’s what you need to know:
Who is eligible: The Small Businesses “Paycheck Protection Program” will offer $349 Billion in loans to small businesses. Small businesses are defined as businesses, nonprofits, or veteran’s organizations with up to 500 employees. Although, this number can be up to 1,500 employees depending on sector, and in some cases, revenue. This also includes sole proprietors, the self-employed and independent contractors.
● This program excludes nonprofit organizations receiving Medicaid reimbursements.
Who is providing the loans: Lenders approved by the U.S. Department of Treasury and SBA (Small Business Administration) will provide loans.
Loan amounts: Loans are generally to cover monthly payroll costs for 2.5 months, not in excess of $10 million. Payroll costs exclude compensation paid to individuals, including the self-employed, above $100,000 a year.
● Allowable uses of the loan include employee salaries, paid sick or medical leave, insurance premiums, mortgage payments, and any other debt obligations.
Requirements: Employers must certify that they will maintain their average full-time equivalent employment with incentives to rehire if employees have been furloughed.
● When applying for a loan, lenders must determine whether the business, organization, or independent contractor was in operation on February 15, 2020 and had employees to whom it paid salaries and payroll taxes.
● It will be easy to apply for a loan through the SBA.gov website.
● Borrowers can not be charged any prepayment fees.
Loan forgiveness: Borrowers will have a portion of their loan forgiven in the amount equal to their eligible payroll costs (see above), interest payments on mortgages, rent payments and utility payments for the time between February 15 and June 30, 2020.
● Loan forgiveness will be reduced if the borrower reduces employment or salaries and wages by more than twenty five percent.
● Borrowers are eligible to defer loan payments for up to one year.
● Remaining loan balance will have a maturity of 10 years, max.
Other options: Borrowers who receive loans under this program are not eligible to receive Economic Injury Disaster Loans through the SBA. If you need immediate relief, small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan through the SBA’s Economic Injury Disaster Loans. You can apply on the SBA’s site here.
● This program provides low-interest loans of up to $2 million to help overcome the temporary loss of revenue.
● You can use disaster loans for a number of purposes, including fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
● The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
● Terms are determined on a case-by-case basis, but SBA offers loans with repayment terms up to 30 years.
● If you have an existing loan under this program, payments will be deferred through the end of the year.
● If you need additional counseling or guidance in navigating through a preparedness plan, please reach out to the SBA through sba.gov.
COVID-19 has created a new normal for most of us--and especially for those among us who own a small business. If you’re the owner of a small business and you find yourself in a situation where you need relief, you’ll be glad to know that legislators are currently working through the details of a program that could help. It’s called the Paycheck Protection Program approved by the U.S. Senate as part of the Coronavirus, Aid, Relief and Economic Security act or “CARES” act to help support small businesses. Here’s what you need to know:
Who is eligible: The Small Businesses “Paycheck Protection Program” will offer $349 Billion in loans to small businesses. Small businesses are defined as businesses, nonprofits, or veteran’s organizations with up to 500 employees. Although, this number can be up to 1,500 employees depending on sector, and in some cases, revenue. This also includes sole proprietors, the self-employed and independent contractors.
● This program excludes nonprofit organizations receiving Medicaid reimbursements.
Who is providing the loans: Lenders approved by the U.S. Department of Treasury and SBA (Small Business Administration) will provide loans.
Loan amounts: Loans are generally to cover monthly payroll costs for 2.5 months, not in excess of $10 million. Payroll costs exclude compensation paid to individuals, including the self-employed, above $100,000 a year.
● Allowable uses of the loan include employee salaries, paid sick or medical leave, insurance premiums, mortgage payments, and any other debt obligations.
Requirements: Employers must certify that they will maintain their average full-time equivalent employment with incentives to rehire if employees have been furloughed.
● When applying for a loan, lenders must determine whether the business, organization, or independent contractor was in operation on February 15, 2020 and had employees to whom it paid salaries and payroll taxes.
● It will be easy to apply for a loan through the SBA.gov website.
● Borrowers can not be charged any prepayment fees.
Loan forgiveness: Borrowers will have a portion of their loan forgiven in the amount equal to their eligible payroll costs (see above), interest payments on mortgages, rent payments and utility payments for the time between February 15 and June 30, 2020.
● Loan forgiveness will be reduced if the borrower reduces employment or salaries and wages by more than twenty five percent.
● Borrowers are eligible to defer loan payments for up to one year.
● Remaining loan balance will have a maturity of 10 years, max.
Other options: Borrowers who receive loans under this program are not eligible to receive Economic Injury Disaster Loans through the SBA. If you need immediate relief, small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan through the SBA’s Economic Injury Disaster Loans. You can apply on the SBA’s site here.
● This program provides low-interest loans of up to $2 million to help overcome the temporary loss of revenue.
● You can use disaster loans for a number of purposes, including fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.
● The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%.
● Terms are determined on a case-by-case basis, but SBA offers loans with repayment terms up to 30 years.
● If you have an existing loan under this program, payments will be deferred through the end of the year.
● If you need additional counseling or guidance in navigating through a preparedness plan, please reach out to the SBA through sba.gov.
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