SBA PPP Loan Program
Coronavirus Pandemic Business Help Loan
As severe economic impacts from the world-wide coronavirus epidemic spread across the USA, the Small Business Administration has officially announced implementation of the Congressionally mandated Paycheck Protection Program.
This program is intended to provide partially-forgivable loans to “Small Business” employers who have been impacted by the COVID-19 pandemic.
The SBA is using 500 employees as its definition of “Small Business”, which allows participation by national chain stores & restaurants. While Congress crafted this bill to benefit as many employees as possible across the country, it seems probable that a lot of local Mom & Pop shops might have a problem with that definition.
Many in the media are referring to this as a “small business rescue” program, although the focus is clearly on maintaining employment rather than paying the much wider range of everyday business expenses.
The PPP program will be officially administered by the SBA, but loan applications will be submitted directly to banks & other financial institutions, who will actually make the loans. The SBA will guarantee the loans, which will have a term of 2 years at 1% interest. Banks will also be paid processing fees for handling the loans.
Due to the low interest rate and short 2-year term of the loans, some financial institutions have already announced that they will decline to participate in the PPP program.
SBA statements about the Loan program:
“Our nation’s small businesses are facing an unprecedented economic disruption due to the Coronavirus (COVID-19) outbreak. On Friday, March 27, 2020, the President signed into law the CARES Act, which contains $376 billion in relief for American workers and small businesses.”
More from the SBA:
“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.
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.”
For official details about the program, visit the SBA website:
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