3/26/20 - Small Business Loans & Provisions

As a result of the stimulus package, the following loans and provisions will be made available to small businesses.

  • Paycheck Protection: Forgiveness for Small Business Loans for Keeping Employees – for small employers, self-employed individuals and “gig economy” workers, $350 billion has been included to help prevent workers from losing jobs and small businesses from going under with 8 weeks of cash-flow assistance through 100% federally guaranteed loans to small employers who maintain their payroll during this emergency.

  • If the employer maintains payroll, the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent and utilities would be forgiven. Proposal is retroactive to 2/15/2020 to help bring workers who have already been laid off back on payrolls.

  • Debt Relief: For 6 months, SBA is required to pay principal, interest and fees on all existing SBA loan products, including 7A, Community Advantage, 504 and Microloan programs for 6 months

  • Small Business Contractors - Federal agencies would be required to extend contract performance periods and promptly pay small business contractors impacted by COVID-19.

Small Business Loans (new bill)

Businesses with fewer than 500 employees can apply for fee-free loans for up to $10 million to help in paying payroll, employee salaries, mortgages, rent and some other debt obligations.

Businesses retaining their employees and payroll levels between March 1, 2020 and June 30, 2020, would have money used for payments on pre-existing debt and payroll forgiven.

NOTE: Tax consequences of the forgiveness uncertain for the amount to pay down debt.

SBA Economic Injury Disaster Loan Program (previously announced)

Small businesses can apply for loans for working capital needed as a result of COVID-19 of up to $2 million with an interest rate of 3.75% for small businesses and 2.75% for nonprofit organizations for terms of up to 30 years. Generally the maximum unsecured loan will be $25,000 but the SBA will be flexible on this. This loan program is different from other SBA loan programs since you do not apply through a bank. You will be applying directly to SBA and the funds come directly from the US Treasury. You can apply at sba.gov.

SBA Express Loan Program (previously announced)

The SBA also has an express loan program which provides loans of up to $350,000 for no more than 7 years with an option to extend them. There is a turnaround time of 36 hours for approval or denial of an application. This program does go through a bank as usual. You can get more information at sba.gov/funding-programs/loans.

NYC Grant and Loan Programs (recently announced)

Employee Retention Grant Program - businesses with fewer than 5 employees with a COVID-19 related decrease in revenue of at least 25% can apply for a grant to cover 40% of payroll costs for two months to help retain employees.

NYC Small Business Continuity Loan Fund

Businesses with fewer than 100 employees who have a COVID-19 related decrease in revenue of at least 25% may be eligible for zero interest loans of up to $75,000 to help retain employees and ensure business continuity.

Your professionals at Castellano Korenberg & Co. are always available to assist you through this tough time of trying to make sense of all the new regulations being passed. Stay up to date with the most recent information by visiting our Coronavirus Resource page on our website, call us at 516-937-9500, or contact your CK professional for more information.

#LoanProvisions #covid19 #smalllbusiness

© 2016 - 2020 Castellano, Korenberg  & Co., CPA's, P.C

  • LinkedIn Clean
  • Facebook Clean