Pease & Gustafson law firm has a brief overview of a few of the programs available to small businesses under the newly enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The Paycheck Protection Program (PPP) provides small businesses with funds to pay up to eight weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities. The loans under the PPP are federally insured and Small Business Association (SBA) preferred lenders will begin taking applications on April 3 for small businesses and sole proprietorships, and April 10 for independent contractors and self-employed individuals. The goal is that funds will be available within a three-week period. Businesses may be eligible to have up to 100% of the loan forgiven, subject to certain qualifications, requirements and limitations.

Economic Injury Disaster Loan (EIDL) and Advance Loans provide small businesses with working capital to help them overcome the temporary loss of revenue they are experiencing. If you have a low payroll or need funds in excess of the amounts you qualify for under PPP, consider an EIDL loan, as these loans have low rates, longer repayment terms and can be used for more purposes than the PPP loans. These loans do not appear to offer any form of loan forgiveness, but may include a quick $10,000 advance (grant) to affected businesses that does not need to be repaid.

SBA Express Bridge Loans allow small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can be a term loan or can be used to bridge the gap while applying for a direct EIDL loan.

As part of debt relief efforts, SBA will automatically pay the principal, interest, and fees of current 7(a) loans for a period of six months. The SBA will also automatically pay the principal, interest, and fees of new 7(a) loans issued prior to September 27, 2020.

People and businesses 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.

“Please remember that the information … is only an overview of such programs, and is not meant to constitute an exhaustive list of each program’s terms, conditions and eligibility requirements,” Pease & Gustafson said in a news release.

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