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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
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For loans > $25,000, some collateral is required, but not necessarily in value equivalent to amount borrowed
APPROVAL
BASIS & REQ
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​In business on 02/15/2020
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Had employees or contractors
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Borrower certifies that
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Current economic conditions necessitate the loan​
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Loan funds will be used to pay salary/wages, mortgage/ lease, and/or utilities
-
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
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​Payroll and compensation related expenses (See above Payroll Cost Includes section)
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Rent & Utilities
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Mortgage Debt Interest
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Anything a regular 7(a) loan can be used for
DISALLOWED
FUND USES
-
Refinancing existing debt​
-
Damage repairs
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Fed, State, local penalties
-
Fines (Civil or Criminal)
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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
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