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Get it Before It’s Gone! A Summary of SBA Loan Programs

While many businesses are struggling to stay afloat due to the effects of forced business closures resulting from the Covid-19 pandemic, there are fortunately several options for business owners to keep their businesses operational.

The following is a summary of the loan programs that are available from the US Small Business Association in partnership with local lenders. Information for this blog was taken from the SBA website. Please check this link for the latest updates, and information on this topic changes rapidly.


Here is a short summary, with more details below on each loan type.

Paycheck Protection Program– This loan program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program.


EIDL Loan Advance- This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.


SBA Express Bridge Loans- Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.


SBA Debt Relief- The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic.

  1. Paycheck Protection Program

U.S. Small Business Administration | SBA.gov

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.


SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.


As of April 3, 2020, 13,669 PPP loans were approved, and $4.3 billion disbursed of the $349 billion available to small businesses.


You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

Lenders may begin processing loan applications as soon as April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020.


Who Can Apply

Photo by Ketut Subiyanto from Pexels

This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.


Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.


Small businesses in the hospitality and food industry with more than one location could also be eligible if their individual locations employ less than 500 workers.


Loan Details and Forgiveness


The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.


Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.


This loan has a maturity of 2 years and an interest rate of 1%.


Other Assistance


In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are currently eligible to apply for disaster assistance.


Enhanced Debt Relief is also available in SBA’s other business loan programs to help small businesses overcome the challenges created by this health crisis.

For information on additional Lending options, please click here.


SBA provides local assistance via 68 district offices and a nationwide network of resource partners. To find resources near you, please click here.


Lender Forms and Guidance


The Interim Final Rule announcing the Paycheck Protection Program information is being posted in advance of publication in the Federal Register. The official version will appear in the Federal Register. Click here to download.


Click here to download the Paycheck Protection Program Lender Application Form. Lenders who need assistance accessing SBA’s E-Tran system to process loan guarantee requests may call our Lender Customer Service Line at 1-833-572-0502.

Click here to view the Lender Agreement and enroll as a participating SBA Lender to make Paycheck Protection Program financing available to your customers.

Small Business Administration

U.S. Small Business Administration | SBA.gov

2. Economic Injury Disaster Loan Emergency Advance


This loan advance will provide up to $10,000 of economic relief to businesses that are currently experiencing temporary difficulties.


Overview


In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.


Eligibility


The SBA’s Economic Injury Disaster Loan provides vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing as a result of the COVID-19 pandemic.


This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19.

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.


The Economic Injury Disaster Loan advance funds will be made available within days of a successful application, and this loan advance will not have to be repaid.

To apply for a COVID-19 Economic Injury Disaster Loan and loan advance, click here.

3. SBA Express Bridge Loans


Enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.

 

Photo by Charles Parker from Pexels

Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.


Terms

  1. Up to $25,000

  2. Fast turnaround

  3. Will be repaid in full or in part by proceeds from the EIDL loan

Overview


As part of SBA’s debt relief efforts,

  1. The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.

  2. The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.

4. Additional Debt Relief


For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.