Below are frequently asked questions about loan options for small business impacted by COVID-19. With more specific questions, please visit sba.gov/coronavirus, contact your lender, or email the Curtis office HERE.
Is your small business struggling due to the recent coronavirus epidemic?
Your business may be eligible for a new Paycheck Protection Loan. This 4% interest rate loan is 100% guaranteed by the SBA.
Who is eligible?
Businesses and 501(c)(3)s with less than 500 employees.
Where can you get this loan?
Any existing SBA lenders and any lenders that are brought into the program through the Treasury. You should talk to your preferred financial lender to see if they qualify.
What can you use the loan amount for?
Payroll costs, Group health care benefits, Employee salaries, Interest on any mortgage obligation, Rent, Utilities, And any other debt obligations occurred before Feb. 15, 2020.
How much can you borrow?
The maximum amount is the lesser of $10 million or 2.5 times the average monthly payroll based on last year’s payroll.
How long will it take to receive the money?
The SBA has authorized lenders to process, close, and service loans without SBA approval, giving you the means to invest in your business immediately.
What if you can’t pay it back?
First, all payment on principle, interest, and fees will be automatically deferred for six months. Second, for businesses that retain their staff up until June 30, 2020, this loan will be forgiven.
Can the entire loan be forgiven?
No, only the portion of the loan used to cover payroll costs, mortgage interest, rent, and utilities can be forgiven. In addition, only 8 weeks can be forgiven.
Will 501(c)(6) organizations receive assistance under the Proposal?
No, Congress expands eligibility to 501(c)(3) nonprofits only.
Can a borrower double dip between an Economic Injury Disaster Loan (EIDL) and a new Paycheck Protection loan under the Senate proposal?
Businesses will be able to receive an EIDL and a Paycheck Protection loan as long as they go for different things. For example, a business can receive an EIDL for working capital and a Paycheck Protection loan for payroll assistance. Additional flexibility is granted through no prepayment penalties on EIDLs and no prepayments penalties on Payment Protection loans. Additionally, a refinancing option has been included.
Under the Senate proposal, the maximum loan amount intended for payroll and operating costs for small businesses is the monthly payroll times 2.5 with a maximum cap of $10 million. 2.5 times the average monthly payroll is not nearly enough money for small businesses.
The Senate is keeping the calculation at 2.5 times monthly payroll, earmarked to payrolls, etc. over 8 weeks, because that is what the S350 billion will cover.
In the Paycheck Protection Program, are non-profits eligible, are churches eligible, are chambers of Commerce and physician practices eligible?
Non-profits and churches designated as 501(c)(3) may participate in the Paycheck Protection Program. Physician practices are eligible, regardless of how they are structured (i.e. as an S-Corp, C-Corp, or sole proprietorship). Unfortunately, most trade associations (therefore most Chambers) are organized at 501(c)(6)s. They are not eligible to participate under the Senate bill.
In the Paycheck Protection Program, can small businesses hire back employees they already fired and still have the loans forgiven? What is the hire backdate?
Yes. There is flexibility in the program to allow businesses to rehire folks they have laid off and still qualify. They simply need to be in business before February 15th and show the lender they have had employees on the payroll.
What are the exact steps for small businesses to access the capital? Where can I find the information? Is there a video or other form of assistance?
The best place to go is your lender. The SBA and Treasury will be producing documents and instructional materials, but that takes time and your lenders would be the fastest way to get information.
How quickly will businesses be able to access loans?
We are working with the SBA on capacity issues, including onboarding new lenders. The SBA is assuring us they will have things in place and that they are ready to stand up all of the requirements within the Senate bill as quickly as possible. We will continue to press them to move expediently. The SBA is also moving at a faster rate, with the help of the resources Congress has provided them.
What does this bill do to provide relief for rural communities and farmers?
The bill includes a number of small business provisions designed to help farmers stay in business and take care of their employees during this difficult time. These include provisions that allow farmers to work with their trusted farm credit institutions for the purposes of securing payroll tax loans, along with 1 – year deferrals, 100% guarantees,, and low rates.
The bill provides $14 billion for the Commodity Credit Corporation (CCC), the funding mechanism for all major USDA programs. It also appropriates an additional $9.5 billion to specifically respond to losses due to COVID – 19.
Additional funding is provided for USDA agencies that are on the front lines of responding to COVID – 19, including the Food Safety Inspection Service (FSIS), the Animal and Plant Health Inspection Service (APHIS), and the Farm Service Agency (FSA).
The bill also includes $100 million to provide financing for rural broadband through the ReConnect program and $25 million for the Distance Learning and Telemedicine program to provide grants for equipment and connectivity improvements.
Employee retention credit – how will this work?
The Employee Retention Credit provides a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the coronavirus crisis.
The credit is available to employers: a) whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or b) whose quarterly receipts are less than 50% for the same quarter in the prior year.
Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer’s closure or economic hardship are eligible for the credit.
However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours.
To prevent double-dipping, employers that receive Small Business interruption loans are not eligible for the credit. Additionally, wages that qualify for the required paid leave credit are not eligible for the credit.
The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.