Due to the on-going COVID-19 pandemic, the President of the United States has signed into law the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
This means that the government has provided $376 billion in relief for American workers and small businesses. The Paycheck Protection Program, created during the COVID19 Pandemic, has been designed to help small businesses remain open while retaining all their employees.
However, there are terms and conditions to the loan that are available per the U.S. Small Business Administration:
- Eligible businesses are categorized as all small businesses, including non-profits, Veteran’s organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries.
- Maximum loan amount up to $10 million
- Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)
All loans under this program will have the following identical features:
- Interest rate of 1%
- Maturity of 2 years
- First payment deferred for six months
- 100% guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA
Through the CARES Act, small businesses will receive the capital needed without collateral requirements, personal guarantees or SBA fees.
For more information, visit the U.S. Small Business Administration website at www.sb.gov.