NO FOOLING – Forgivable Small Business Loans to Bring Relief

Forgivable Small Business Loans to Bring Relief

The U.S. Small Business Administration is gearing up for what’s being called an “unprecedented” level of funding soon to be available under the new Paycheck Protection Program.

Sole proprietors, independent contractors, gig economy workers, and self-employed individuals who are struggling to pay their bills due to the shutdowns and stay-in-place orders aimed at curbing the spread of the coronavirus are all eligible for a small-business loan. The $350 billion program is part of the $2 trillion economic stimulus package passed by Congress last week and signed into law by President Donald Trump on Friday. However, it is still unclear when the program will begin accepting applications.

“We haven’t seen this level of funding and money being pushed out of the SBA in such an extremely narrow window of time. It’s going to be difficult logistically,” said David Pommerehn, Consumer Bankers Association general counsel, in a Politico article. “The industry as a whole, including the SBA and partner lenders, really needs to work very tightly to make sure as much goes out as possible, as quickly as possible.”

Small businesses and independently owned franchises that are approved by the SBA and that employ 500 employees or fewer can qualify. The amount any small business is eligible to borrow is 250% of their average monthly payroll expenses (with individual salaries capped at $100,000 per year), up to a total of $10 million. The amount of the loan is intended to cover eight weeks of payroll expenses and any additional amounts for making payments towards debt obligations. The eight-week period may be applied to any time frame between Feb. 15, 2020 and June 30, 2020.

The goal of the program is to help business owners retain their employees at their current base pay. If all employees are retained and the business maintains at least 75% of their average salary levels during the 8-weeks, the entirety of the loan will be forgiven. If any employees are laid off or salary levels go below 75%, the forgiveness will be reduced by the percent decrease in the number of employees.

The Economic Injury Disaster Loan program will also offer up to $2 million for working capital costs, with a possible $10,000 advance grant that will be forgiven if applied to a permissible use, including payroll, paid time off, mortgage, rent, utilities, and debts from prior to Feb. 15, 2020. If the loan is used for other purposes, the borrower will have 30 years to pay it off at an interest rate of no more than 3.75%, with the first month’s payment deferred a full year from the date of the promissory note. 

Business owners can get both loans, but they cannot use them for the same purposes. In addition, if the borrower receives a $10,000 EIDL advance grant and PPP loan, the advance grant will not be forgiven. 

For more information, visit the National Association of REALTORS®’ coronavirus advocacy frequently asked questions page and click on “Independent Contractor/Small Business Concerns.”

Source: “Banks press administration to unleash $350B in small business loans,” Politico (March 31, 2020)

I read this article HERE 

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Sabrina Caton - The Caton Team - Realtors

Sabrina & Susan are native Californians - born and raised in the Silicon Valley with a passion for Residential Real Estate. A mother and daughter-in-law duo called - The Caton Team. With over 35 years of combined, local Real Estate experience and knowledge – would’t you like The Caton Team to represent you? Let us know how we can be of service. Contact us any time. Call | Text at: 650-799-4333 | Email Info@TheCatonTeam.com The Caton Team believes, in order to be successful in the San Fransisco | Peninsula | Bay Area | Silicon Valley Real Estate Market we have to think and act differently. We do this by positioning our clients in the strongest light, representing them with the utmost integrity, while strategically maneuvering through negotiations and contracts. Together we make dreams come true. The Peninsula is our backyard - let us help make it yours. We represent Buyer’s and Seller’s throughout the Bay Area. The Caton Team – Susan & Sabrina A Family of Realtors Effective. Efficient. Responsive. What can we do for you?

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