THE

CARES

ACT

Read HR 748 (the CARES Act) in its entirety here~

CORONAVIRUS AID, RELIEF,

& ECONOMIC SECURITY ACT

the

The TWO major financial assistance programs for businesses are:

THE

ECONOMIC INJURY DISASTER LOAN

(DISASTER LOAN)

&

THE

PAYCHECK PROTECTION PROGRAM

(BUSINESS INTERRUPTION LOAN)

  • Small Businesses

      (< 500 employees),

       including franchises

  • 501c Nonprofits (Types: 3, 4, 6, 7, & 19 only)

  • Sole Proprietors; Self-Employed; Contractors

QUALIFYING BUSINESSES

  • Small Businesses         

      (< 500 employees),

       including franchises

  • 501c Nonprofits (Types: 3 & 19 only)

  • Sole Proprietors; Self-Employed; Contractors

SOURCE/

LENDER

Lending direct from SBA, Apply with SBA

Lending through banks, guaranteed by SBA; Apply at Bank

ADDITIONAL

ASSISTANCE

& RELIEF

  • Credit Score Satisfactory

  • In business on 1/1/2020

  • For loans > $25,000, some collateral is required, but not necessarily in value equivalent to amount borrowed

APPROVAL

BASIS & REQ

  • In business on 02/15/2020

  • Had employees or contractors

  • Borrower certifies that

  1. Current economic conditions necessitate the loan​

  2. Loan funds will be used to pay salary/wages, mortgage/ lease, and/or utilities

  3. Borrower has not received another loan for the same expenses

LOAN SIZE &

CALCULATION

Based on the borrower's "economic injury" (ordinary & necessary expenses borrower is unable to pay due to coronavirus impact).

Maximum loan is $2 million.

At borrower's request, a grant of up to $10,000 is provided by the SBA within 3 business days of loan application receipt. Approval or Denial of the loan has no bearing on receipt of this grant money, which does not have to be repaid. 

Up to 2.5 X the borrower's average monthly "Payroll Cost" (for the 12 months preceding loan date; for seasonal and newer businesses, alternate calculations are available)

Maximum loan is $10 million

Payroll Cost Includes Spending on:

~Income, wages, commissions, tips, independent contractor payments, & similar compensations, up to $100,000 per individual;

~paid out vacation, sick, family, personal, medical, or other leave; 

~provision of health care benefits, including premiums;

~provision of retirement benefits

state & local taxes on compensation of employees

~Outstanding balance of Economic Injury Disaster Loan, if applicable and if borrower desires to refinance/consolidate

*Note that a PPP Loan can be used to refinance an Economic Injury Disaster Loan, however, a Disaster Loan cannot be used to refinance a PPP Loan b/c having another loan such as a PPP makes you ineligible for a Disaster Loan.

INTEREST RATE

& TERM

Maximum Interest Rate: 4.00

Expected/Typical:

     Businesses-  3.75

     Non-profits-   2.75

Terms vary / case-by-case

Maximum Term: 30 Years

Maximum Interest Rate: 4.00

Expected/Typical:

     Businesses-  3.75

     Non-profits-   2.75

Maximum Term: 10 Years

Payments can be deferred 6-12 months

  • No Personal Guarantees

  • No Collateral for loans

      < $25,000

  • Some collateral is required

      for loans > $25,000, but

      borrowers are not denied

      based on inadequate

      collateral value & will just put

      up what they have

COLLATERAL REQUIREMENTS

  • No Loan Fees

  • No Collateral

  • No Personal Guarantees

  • No Prepayment Penalty

FORGIVENESS OPPORTUNITIES

Only the initial grant (up to $10,000) need not be paid back. 

Forgiveness is based upon the amount of loan funds spent on approved expenses (below) over the first 8 weeks from loan origination. *Business must maintain employee numbers.

An application is required for the forgiveness program, and documentation verifying how the money was spent as well as the maintenance of employee numbers will be needed.

APPROVED

FUND USES

  • Payroll, Accounts Payable, Fixed Debts, Utilities, Rent/ Mortgage, other routine bills

  • Coronavirus-related FMLA Benefits/Paid time off

  • Maintaining payroll (rather than laying off employees) during business disruptions or slowdowns

  • Meeting cost increases due to supply chain interruptions 

  • Repaying obligations that cannot be met due to revenue loss

  • Payroll and compensation related expenses (See above Payroll Cost Includes section)

  • Rent & Utilities

  • Mortgage Debt Interest

  • Anything a regular 7(a) loan can be used for

DISALLOWED

FUND USES

  • Refinancing existing debt

  • Damage repairs

  • Fed, State, local penalties

  • Fines (Civil or Criminal)

  • Dividends or dispursements to owners, partners, stockholders, or officers, except for reasonable compensation for services/work done for the company

  • Payments on loans with another gov. agency (including SBA), or small business investment company

Not specified in available publications​ as of 04/01/2020

Additional Programs & Assistance Include...

SBA EXPRESS LOANS

UP TO 6 MO. DEBT RELIEF FOR EXISTING SBA LOANS

TAX CREDITS, DEDUCTIONS, DEFERMENTS, & MORE

EXCHANGE STABILIZATION FUND

Click here for the 2019-2020 SBA Resource Guide for Alabama

CONTACT US

3425 Pelham Parkway

Pelham, AL 35124

(205) 829-1829

info@harmoncpafirm.com

Fax (205) 829-1199 

​​​​© 2019 by Loren Harmon for Harmon & Associates