Small business owners, sole proprietors, independent contractors and the self-employed are eligible for financial assistance through the federal Paycheck Protection Program, which will extend as much as $349 billion in forgivable loans to enable some businesses to pay employees during the coronavirus crisis.
“We all have to work together to get through this crisis. And in this bill is bipartisan legislation with new tools to help small businesses get through this economic crisis,” said U.S. Senator Ben Cardin (D-MD), one of several members of Congress who took part in a webinar panel discussion of the program on March 27.
Funds available through the program can be used to cover payroll, rent, interest, mortgage or pre-existing debts for an eight-week period after the loan is made. The amount for which a business or individual is necessary will be determined by average monthly payroll over the last year, plus an additional 25% of that amount; and there is no need to show revenue loss to be eligible. The maximum amount a business can receive is $10 million, and the loan will be forgiven so long as proceeds are only used to cover eligible expenses and employee-compensation levels are maintained.
Who is eligible?
Businesses in certain industries can have more than 500 employees if they meet certain SBA employee-based size standards for those industries
When can you apply?
Small businesses and sole proprietorships are eligible now to apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders. Independent contractors and self-employed individuals can apply beginning Friday, April 10. Applications can be submitted through any existing SBA lender or federally insured depository institution, federally insured credit union or Farm Credit System institution that is participating. Visit www.sba.gov for a list of SBA lenders.
How to prepare?
Each applicant is eligible to receive only one loan.
What can you use the loans for?
What counts as payroll costs?
How large can your loan be?
What is your interest rate?
All loans are at 1% interested rate and payments are deferred for the first six months; however, interest will continue to accrue over this period. The balance of the loan will be due in two years.
The idea of the relief package is to give employees and employers a chance to maintain their business in difficult times and not lose it. The first step is to prepare documents and speak to an SBC-certified lender to make sure you qualify.
For more information visit home.treasury.gov.
