COVID-19 SBA Programs - Soto Law Group, P.A.

COVID-19 SBA Programs

Written By: Oscar Soto, Esq

To support small businesses during the Coronavirus (COVID-19), the government has adopted various economic relief programs. This article will cover four major programs operated by the Small Business Administration (SBA).

The Paycheck Protection Program (PPP)  

The Paycheck Protection Program is designed for people who run small businesses. This is an ambitious program both in volume and conditions. Under this program, approximately $349 billion has been allocated. The small business owners who are suffering due to the Corona pandemic will be able to recoup a portion of payroll through this program.

Apart from small business establishments, many non-profit organizations will be eligible for this loan. Even tribal businesses are included in the list. This will also be an opportunity for independent contractors and self-employed youths, provided they fulfill all the conditions to get a loan.

This program offers the following advantages: 

  • SBA will write off loans if all employees are kept on the payroll for eight weeks. The time frame for activation of the process is between February 15, 2020, and June 30, 2020.

  • The amount a small business is eligible to borrow is 250% of their average monthly payroll expenses, not exceeding $10 million. The loan can be utilized for payroll, mortgage interest, rent, and other utilities.

  • Under this program, one is eligible to defer loans for six months.

  • The exemption offered by SBA is based on the maintenance of the employee’s salary levels. Payroll costs include employee salaries (up to annual pay of $100,000), hourly wages, and cash tips. Paid sick or medical leave and group, health insurance premiums, are also included.

For more information, visit: 

https://www.sba.gov/document/sba-form–paycheck-protection-program-ppp-sample-application-form

Economic Injury Disaster Loans and Loan Advance 

The SBA’s Economic Injury Disaster Loan (EIDL) program is another initiative for small businesses. It offers up to $2 million working capital loans to help businesses to overcome any temporary loss of revenue. Small businesses and private non-profits organizations in all U.S. states, Washington DC, and territories are entitled to apply for an EIDL emergency advance of up to $10,000. Thus, it has similarities with the PPP, as described above.

Under the EIDL, one is entitled to get the following benefits:  

The advances under EIDL has to be treated as a working capital loan program, and it cannot be used for the development of business, bonuses, and other expenses that are not related to losses due to COVID-19. The beneficiaries can use the money for operational business expenses associated with the loss of revenue from the disaster, such as payroll, production costs, inventory, sick leave, rents or mortgages, etc.

·         Moreover, to get the advance, the small businesses should apply for an EIDL prior to getting any advance. The advance will not have to be paid back if the EIDL application is rejected. You will receive the funds from the emergency advance within three days after the prayer for the EIDL loan has been successful.

·         This program is accessible to those businesses which were operational on January 31, 2020. The advance can be obtainable until December 31, 2020.

·         One has to submit information on existing collateral and details of financial records to acquire loans over $25,000. Despite not having collateral, your application will not be disqualified if it fulfills other conditions.

·         Some small businesses and non-profit organizations have already received an EIDL loan approved. Small businesses will get an interest rate of 3.75 percent. The interest rate is 2.75 percent for non- profit organizations.

·         The funds for EIDL loans come directly from the U.S. Treasury, not having connections with other banks or SBA.

For more information visit: 

https://www.sba.gov/page/disaster-loan-applications

SBA Express Bridge Loans 

Small Business Administration has got an exclusive loan program only for SMB’s current Express Lenders. This loan will be active during the time when the small businesses are applying for the long-term financial support of the EIDL program.

If small businesses need funds urgently, this is a good option for them. The small business can receive up to $25,000.

For more information visit: 

https://www.sba.gov/document/support–express-bridge-loan-pilot-program-guide

Florida Emergency Bridge Loan

Florida Small business Emergency Bridge Loan Program has developed a short-term interest-free working capital loan intended to help businesses during the COVID-19. To apply for this loan, the business must be located in any of the 67 counties in Florida. Business must have been established and actively operating prior to March 9, 2020. The business must be a for-profit, privately held small business that has a minimum of two employees but no more than 100 employees.

For more information visit: http://floridajobs.org/rebuildflorida/businessrecovery

If you are interested in applying to any of these loans, we do encourage you to apply immediately. If you have any questions or concerns, please give us a call; we are here to assist you.

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