Government Allows for New Small Business Loans for Small Businesses Affected by the Coronavirus

In response to the Coronavirus outbreak in the United States the United States Congress passed the CARES Act (Coronavirus Aid, Relief, and Economic Security Act). CARES provides many provisions designed to help small business owners such as:

  1. Up to ten million dollars in direct payroll support for small businesses.

  2. Economic disaster relief loans up to $10,000.00 from the Small Business Administration.

  3. SSI withholding tax credit for payroll.

  4. Individual payouts of up to $1,200.00 per person.

  5. Retirement plan withdrawals without ordinary penalties.

The Paycheck Protection Program (PPP) Loan


This blog will focus on the Paycheck Protection Program and provide basic information on how it works, and whether you should considering applying for it.

Q: Who can apply?

A: Small businesses (less than 500 employees) that were created prior to February 15, 2020, including sole proprietors, independent contractors, and self-employed individuals. You will probably not be able to apply if you have a criminal record or if you do not have U.S. citizenship or lawful permanent residence.

Q: Where do I apply?

A: From any bank that is an approved SBA lender. More than likely, the bank where you have your business account should suffice, however, different banks have different methods of applying for these loans.

Q: When can I apply? A: April 3, 2020 for small businesses and sole proprietorship. April 10, 2020 for independent contractors and self-employed individuals.

Q: How much can I borrow?

A: This will generally depend on how your business operates, and will primarily focus on payroll, retirement account contributions, state taxes, certain healthcare expenses, and other expenses such as mortgage or rent payments. Q: What is the interest rate?

A: 1%

Q: How long is the loan?

A: 2 years. Q: What can I use the money for? A: Employee salaries, commissions, or similar compensation. Health insurance premiums and health care costs including family leave. Interest on payment of mortgage obligations. Rent. Utilities. Interest on any other debt obligations.

Q: Do I need to place collateral to get the loan? A: No.

Q: Is a personal guarantee required for the loan? A: No. Q: Do I need to have filed my 2019 taxes already? A: This will depend on the lender you use to get a PPP loan.

Q: Will the loan need to be repaid?

A: In certain situations, you may have this loan forgiven. Loan forgiveness will be based on your ability to maintain full time employees. Contact your lending officer at your financial institution to find out more details on how you may be eligible for loan forgiveness. You must apply through the loan lender for forgiveness on your loan. You will need to make sure to save documentation so you can provide it for the loan forgiveness, such as documents verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment filings. Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities. Certification from an officer of your business or organization that the documentation provided is true and that the amount being forgiven was used in accordance with the program's guidelines for use. Q: How long will I have to wait for a response after I apply?

A: This is a tricky question, as the SBA has not issued the necessary guidance or mechanisms for banks to handle the enormous demand for these loans. Many banks are being overwhelmed by applications already, and the SBA is continuing to issue new guidance as to how banks should operate in regards to the PPP loans. Below are the links for the PPP program for some of the most popular banks in the Northwest.

Bank of America: https://about.bankofamerica.com/promo/assistance/latest-updates-from-bank-of-america-coronavirus/small-business-assistance

CHASE: https://recovery.chase.com/cares1

Wells Fargo: https://update.wf.com/coronavirus/paycheckprotectionprogram/ BECU: https://www.becu.org/support/cares-act-sba-ppp

For more information visit the Small Business Administration's website: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp DISCLAIMER: The information in this blog is not meant to be relied upon as legal advice. Please contact a certified lending institution and discuss the details of the PPP loan before making any decision on whether it is correct for your business.

Featured Posts
Recent Posts
Archive
Search By Tags
No tags yet.
Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Basic Square

© Westlake Law PLLC

  • Facebook Social Icon
  • LinkedIn Social Icon
  • Twitter Social Icon