Small Business Loans During Coronavirus
New York's SBA just issued a summary memo about at least one of the loan programs available from the CARES Act that was passed this past Friday. The loan program is called the "Paycheck Protection Program". According to the memo, small businesses (generally those under 500 employees) can apply for -- from lenders participating in the program -- a loan "based on previous payroll and covered cost amounts". Further:
• Up to eight weeks of "eligible expenses" during the covered period can be forgiven from the loan principal as long as the employer maintains previous payroll counts during the emergency. "Eligible expenses" include payroll, insurance premiums, and mortgage, rent, and utility payments. • Loan repayments will be deferred for six months. Lenders can elect to defer the loan for a total of twelve months. • Interest rates associated with the loans will be at a maximum 4% per annum. • There will be no fees for borrowers to apply. • There are no collateral requirements or personal guarantees for the loan.
The covered loan period is from February 15, 2020, to June 30, 2020. Note, a "Borrow must certify in good faith that funds are needed for COVID-19 related purposes, that the funds will be used to retain workers, and that their request is not duplicative with other SBA funds for the same purpose."
The participating banks are not listed. Click here to go to the SBA's site on the topic to keep track.