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On March 27, 2020, the CARES Act, a $2 trillion relief/stimulus bill, was signed into law. When implemented, there will be many new resources available for small businesses. You’ve probably already heard a lot of good information out there about this legislation, but it’s important to note…the provisions in that legislation are not yet available.
SBA and the Department of Treasury are still in the process of implementing all the new loan programs associated with the CARES Act including the Payroll Protection Program. There are several new policies, procedures, and guidelines that must be in place before lenders can begin making these loans. SBA is working on these as quickly as possible so that borrowers can begin applying.
The U.S. Senate Committee on Small Business & Entrepreneurship has released a pretty comprehensive guide outlining the major programs and initiatives that will soon be available and we encourage you to check it out by clicking here.
To read a quick recap from the ADA about the loans affected by the CARES act, click here.
Below are three highlighted programs which may benefit your practice during these times:
Paycheck Protection Program - The Paycheck Protection Program (PPP) is a special 100% guaranteed 7(a) loan program that is expected to provide cash-flow assistance to employers who maintain their payroll during this emergency.
Although not yet available, SBA has delegated authority to lenders (banks, credit unions, etc.) authorized to make SBA 7(a) loans. Look for more information about eligible lenders and additional guidance from SBA coming soon, but at this time we don't know how lenders will go about making these loans.
For additional reading, check out the resource guide put together by the U.S. Chamber of Commerce: PPP - Small Business Guide and Checklist
Debt Relief Program - The legislation indicates this program will provide immediate relief to small businesses with non-disaster SBA loans. and is expected to cover loan payments on SBA loans for six months.
The legislation also mentions relief will be available to new borrowers who take out loans within the next six months.
The specifics of how this program will be implemented are still pending, so stay tuned for more details.
Economic Injury Disaster Loans - The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.
NOTE…given the growing demand for SBA assistance, SBA’s website is struggling to keep up. The best solution might be to download the application instead of applying online. The completed loan documents can then be uploaded to SBA or mailed in.