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    SBA (Small Business Administration) loans

    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.

    #2
    Wonder how long the loan process is? Once you apply to when you receive funding?

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      #3
      I imagine they are going to move quick given the broad economic conditions we are dealing with. But there will be some red tape for sure.

      Comment


        #4
        I always refer to { I am with the government and I am here to help }

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          #5
          Looks like they are expecting the banks to be the front line on this and it appears that those banks will make absolutely nothing off of it.

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            #6
            Originally posted by Johnny Dangerr View Post
            I always refer to { I am with the government and I am here to help }
            This For Sure,,,
            I've been in business 46 years and I don't want any government help
            OR Interference.
            Leave me alone through the Good and the Bad.


            And Please do away with the IRS...........

            Comment


              #7
              Originally posted by "DOC" View Post
              This For Sure,,,

              I've been in business 46 years and I don't want any government help

              OR Interference.

              Leave me alone through the Good and the Bad.





              And Please do away with the IRS...........
              Are you in the restaurant business?

              Comment


                #8
                No Sir.
                Machining Business.


                Sent from my iPhone using Tapatalk

                Comment


                  #9
                  The SBA Website is interminably slow. I would suggest applying at night. You will need a personal financial statement if you are a sole proprietor and copies of your most recent tax returns. The process isn't too bad. I've helped some of my clients, mostly in the food industry.

                  If you are relying on lines of credit, make sure there have been no changes in status. I would expect the lenders to start looking hard at those draws if this keeps up more than another week or two.

                  Comment


                    #10
                    Teamamerica, can you tell us where you are getting the latest information on this?

                    TeamAmerica and jnd1959, are you guys CPAs?

                    Comment


                      #11
                      Originally posted by JTCowpoke View Post
                      Teamamerica, can you tell us where you are getting the latest information on this?

                      TeamAmerica and jnd1959, are you guys CPAs?
                      I'm a cpa for a commercial real estate company. We are getting info from a consultant to 1) consider aid for our own operations and 2) counsel our tenants through the process to help them if possible.

                      I'll pass along any info but the bill should be signed this week and all the details will be clearer.

                      Comment


                        #12
                        Originally posted by RdRdrFan View Post
                        Looks like they are expecting the banks to be the front line on this and it appears that those banks will make absolutely nothing off of it.
                        Banks will most certainly earn interest on all loans. Hard to get a better return than 3.75% fully guaranteed by the govt. Unless you have had other experiences to speak of. Maybe I'm missing your point.

                        Comment


                          #13
                          Originally posted by "DOC" View Post
                          This For Sure,,,
                          I've been in business 46 years and I don't want any government help
                          OR Interference.
                          Leave me alone through the Good and the Bad.


                          And Please do away with the IRS...........
                          In agreement as well, I will make it some how.

                          Comment


                            #14
                            Originally posted by TeamAmerica View Post
                            Banks will most certainly earn interest on all loans. Hard to get a better return than 3.75% fully guaranteed by the govt. Unless you have had other experiences to speak of. Maybe I'm missing your point.
                            Yes, our portfolio earns well in excess of 3.75%. That is below the current pricing for our very best customers. Banks need a net interest margin north of 4.00% and the math doesn’t work at 3.75% unless it is a one off deal that is offset by other loans at much higher rates. But the reality is that these are all extremely short term notes that will be forgiven/paid back by the government in the next few months. Getting a loan on the books takes time and costs money. Add the fact that it is government backed and it takes more time (which means it costs more money to get on the books). Banks won’t make enough in interest on these notes to cover their basic expenses of booking them. Government mandated pro-bono work. We will do it to help our customers. But the way they are rolling this out is bogus.

                            And FYI, there are two programs. There is the disaster loan program at 3.75% and there are the backed loans that are forgivable. I have a bigger issue with forcing the workload on this down through the banks. Why clog this up through the banking system. Just cut the checks direct to the business.

                            Comment


                              #15
                              When you say 'backed loans that a forgivable" does that mean someone can get a loan, not pay loan back and it's forgivable?

                              Comment

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