SBA advises small businesses to apply for COVID-19 loans immediately, before funding reaches cap
On March 27, the president passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which will provide hundreds of billions in loans to businesses in need. For those small businesses that qualify, the Paycheck Protection Program (PPP) will authorize up to $349 billion in forgivable loans as long as:
- Loan proceeds are used to cover payroll costs, most mortgage interest, rent and utility costs over the eight-week period after the loan is made
- Employee and compensation levels are maintained
All loan terms will be the same for everyone. For loans that don't qualify as forgivable, payments will be deferred for six months. It's important to note that employers who have already laid off workers due to lost business brought on by the pandemic may rehire their employees before June 30 to take full advantage of the PPP loan and have it potentially convert into a nontaxable grant under the CARES Act. Consult your tax professional and loan advisor to weigh your options and decide whether this factor could help you regain your economic footing faster.
The COVID-19 Economic Injury Disaster Loan Application program will start on Friday, April 3, and will last until June 30, 2020. The Small Business Administration (SBA) encourages loan seekers to apply as soon as possible because there is a funding cap.
Who can apply for the loan
All businesses with 500 or fewer employees may apply for the loan, including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals and independent contractors. Some businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
When and how to apply for the loan
Applications for these loans will be accepted by any SBA lender or participating federally insured depository institution, federally insured credit union, or Farm Credit System institution starting on April 3.
There is likely to be a high demand for these loans, so please fill out this sample application form and work with your payroll team to gather current employee payroll wages for the last 12 months immediately to ensure a timely loan application.
Further guidance on the loan program
The U.S. Chamber of Commerce has prepared a Coronavirus Emergency Loans Small Business Guide and Checklist to answer your questions regarding loan eligibility and more. The U.S. Treasury department also put together a PPP fact sheet for potential loan borrowers.
Review the Department of Labor's COVID-19 fact sheets for more details on recent legislation.
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G&A is taking all necessary precautions and measures to ensure you continue to receive world-class services from our team of HR, payroll and benefits experts. Visit our COVID-19 site to access helpful resources.