As the increase in the number of COVID-19 confirmed patients does not get slow, many around the world are analyzing the impact of the COVID-19 pandemic on the economy. Indeed, many businesses are affected by the resulting disruption of the economy, especially “small businesses” and startups.
As the COVID-19 epidemic and its response continue to hinder normal economic activity, many employers are faced with difficult decisions about maintaining operations.
These are times when you want to have a Law partner you can count on. Our partner & sponsor McCarter & English is here to help. Below are 3 articles they just published about the loan programs currently offered by the Small and Medium Business Administration (SBA), provided in the CARES Act.
Massive Stimulus Package Provides Numerous Avenues of Relief for Businesses
This article gives a general overview of what the the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) is about:
- How the CARES Act may pay your workers for you if you’re a small business
- How it will provide enhanced unemployment Benefits when employers do not qualify for SBA loans or otherwise need to temporarily or permanently separate employees from service.
Overview of SBA Loan Programs Available During the COVID-19 Pandemic
This article details the following programs and options Small Businesses can benefit from:
The SBA 7(a) Loan Program
The most important SBA loan program currently offered by the Small and Medium Business Administration (SBA). SBA 7(a) loans offer loans up to $5 million, partially guaranteed by SBA. The program is managed directly by banks and other financial institutions, and businesses apply for direct loans with participating banks.
The SBA’s Emergency Loan Program for Businesses Impacted by COVID-19
The SBA operates a Disaster Loan Program that provides loans of up to $2 million to eligible small businesses. The article details eligibility criteria.
Loans from Small Business Investment Companies
Another source of funding that businesses should consider are direct loans from Small Business Investment Companies (SBIC”). An SBIC can be more flexible than a bank that is providing an SBA Section 7(a) loan
SBA’s Paycheck Protection Program and Other SBA Relief for Small Businesses Provided in CARES Act
This article addresses a portion of the CARES Act whose key provisions are intended to provide small businesses with accelerated access to desperately needed liquidity during these unprecedented times. This part of the CARES Act is aptly named the “Keeping American Workers Paid and Employed Act.”
The article details the following programs, and explains what are the steps that you should take now as a Small Business.
The Paycheck Protection Program
The $350 billion payroll protection program (“PPP”) expands the US Small Business Administration (“SBA”) Guarantee Section 7(a) Loan Program for Qualified Small Business (detailed here). Under the PPP, eligible small businesses can borrow up to $10 million from participating banks and other financial institutions by June 30, 2020. Conditions and how to apply for a PP loan are detailed in the article.
Loan Forgiveness
A PPP borrower may have the principal amount of the loan be forgiven. Details and explanations are provided.
Emergency Economic Injury Disaster Loan Program
Section 1110 of the CARES Act expands the SBA’s 7(b)(2) EIDL Program by making $10 billion available for emergency loans (“Emergency EIDL Loans”). Conditions for availability and process are detailed.
Debt Relief Programs
Pursuant to Section 1112 of the CARES Act, the SBA is required to pay all loan payments, including principal, interest and fees, on numerous SBA Loans. Details and conditions are provided.
Coauthored by Ahyoung Cho