CARES Act: Grants and Loans
We want to update you on several key opportunities for our small business and nonprofit clients to obtain forgivable loans that will provide employers and the self-employed with cash-flow assistance to meet emergency cash flow needs and assist in covering the cost of retaining employees.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 to small businesses and private
non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
To apply for the advance, click on this link https://covid19relief.sba.gov/#/business-info
Paycheck Protection Program (PPP) Loans
The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
Funds are provided in the form of loans that will be fully forgiven when 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.
All small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.
Beginning April 3, 2020, small businesses and sole proprietorships will be able to apply with their financial institution (exceptions apply). Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap. Please see attached Paycheck Protection Program Application Form (SBA Form 2483) and Paycheck Protection Program Information Sheet for Borrowers.
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. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.
Please let me know if you have questions about any of the information listed above or if you need assistance with the applications. We will continue to post updates as we receive them. Check out our website, www.johnsonblock.com, for up to date information.