COVID-19 SBA Loans
During these challenging times, we certainly want to do what we can to assist our customers and our community in maintaining their workforce. We are closely monitoring all of the developments surrounding the CARES Act Relief Package that was signed in to law last Friday.
Of particular interest is a new SBA program called the Payroll Protection Program. We are waiting on SBA to provide the final process and procedures, but have been told that they will be available by the end of this week. It is likely that this is the program that you have been hearing about in the news.
SMALL BUSINESS PAYCHECK PROTECTION PROGRAM
Here are a few of the more interesting highlights:
- The eligible loan amount will be 2.5 times (business name) average monthly payroll.
- Financial data necessary to qualify will be limited and will be replaced by a short list of representations made on behalf of the company
- No security will be taken
- No personal guarantees will be required
- A portion of the loan may be forgiven without any negative tax implications
- MABank will be able to act as your point of contact rather than a SBA representative
- The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
Funds are provided in the form of loans may be forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments may be deferred. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Must Keep Employees on the Payroll—or Rehire Quickly
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
All Small Businesses Eligible
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.
When to Apply
Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap.
How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.
The Paycheck Protection Program is implemented by the Small Business Administration with support from the Department of the Treasury. Additional information may be found at www.sba.gov or www.coronavirus.gov.
The information on this page is subject to change. Please talk with your lender to fully understand your unique situation.
Economic Injury Disaster Loan Advance OFFERED THROUGH SBA:
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
- The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- These loans may be used to pay 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. The interest rate for non-profits is 2.75%.
- SBA offers long term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case by case basis, based upon each borrower's ability to repay.
- The SBA's Economic Injury Disaster Loans are just one piece of the expanded focus of the federal governments coordinated response, and the SBA is strongly committed to providing the most effective customer focused response possible.
- For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 or email firstname.lastname@example.org.