WASHINGTON (WAFF) - Following President Donald Trump’s signing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced that the SBA and Treasury Department have initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need.
The CARES Act establishes a new $349 billion Paycheck Protection Program. The program will provide relief to millions of small businesses so they can sustain their businesses and keep their workers employed.
The new loan program will help small businesses with their payroll and other business operating expenses. It will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees, all with a 100 percent guarantee from SBA.
All loan payments will be deferred for six months. And the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.
Visit SBA.gov for more information on the Paycheck Protection Program and the SBA’s assistance to small businesses.
The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid off employees through June 30, 2020.
Loan terms & conditions
- Eligible businesses: All businesses, including nonprofits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries
- Maximum loan amount up to $10 million
- Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs)
- All loans under this program will have the following identical features:
- Interest rate of 0.5 percent
- Maturity of 2 years
- First payment deferred for six months
- 100 percent guarantee by SBA
- No collateral
- No personal guarantees
- No borrower or lender fees payable to SBA