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The CARES Act Paycheck Protection Loans and Other COVID-19-Related Government Programs

By April 1, 2020 No Comments

In the context of the COVID-19 pandemic, there are many government backed loan programs to help small businesses weather the financial storm of this pandemic. You can find all the information regarding these programs at: https://www.sba.gov/

You can apply here:

https://covid19relief.sba.gov/#/

For Florida businesses, there are additional programs. The information and application can be found here:

http://floridajobs.org/

For convenience, we summarize the most interesting details here:

Paycheck Protection Program.

This is, in my opinion, the most interesting of all the programs. It is, in essence, a loan to help you make payroll so that you don’t have to lay off your employees.

What’s even more interesting is that the loan can turn into a grant (free money), if your employees are kept on the payroll for eight weeks and you used the money for salaries, rent, mortgage interest, or utilities. At least 75% of the forgiven amount must have been used to pay salaries.

Once you get it, loan payments will be deferred for six months. There are no processing fees charged by the government or the lender. The program is available for businesses with less than 500 employees. Many approved Small Business Administration (SBA) banks offer this loan and will start processing applications as soon as April 3, 2020.

Under this program, you can borrow up to 2.5 times your average monthly payroll costs. For example, if you monthly payroll is $20,000, you could borrow up to $50,000. Also, the government has promised that these loans will be approved quicker than normal SBA loans, since the goal is to help your business make payroll, and that you do not shut down due to the pandemic.

When it comes to loans for small businesses, it doesn’t get better than this. Call your local bank for their specific guidelines as to how to qualify for this great opportunity.

SBA Disaster Assistance Loans

This is more like a normal type of SBA loan, meaning, a longer term and repayment plan. Consequently, it will likely be subject to more typical underwriting processes and good review of your finances.

These programs offer up to 2 million in help. The loan must be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the COVID-19 impact. The interest rates for these loans will be 3.75% — not bad.

Loans will be given for a term of up to 30 years, but the term will be evaluated on a case by case basis. Since this process might be a little longer than other programs, the government is offering a quick, $10,000 advance. You can apply for $10,000 advance here: https://covid19relief.sba.gov/#/

Florida Emergency Bridge Loan

This is a Florida sponsored loan. These are short, one-year term, interest-free working capital loans that are intended to “bridge the gap” between the time COVID-19 hit and the time when your business will come back to normal, which is, for now, uncertain.

Eligible applicants can receive up to $50,000 in working capital, and in special circumstances, up to $100,000. The loan is interest free for the one-year term. After the one year, the loan will have a 12% yearly rate. So, if you think you may not be able to pay back this loan in 12 months, it may not be a good idea for your business.

For more information about loan programs, or anything legal inquiry for small business in the context of this pandemic, call us at 305-570-2208 email us at eayala@ayalalaw.com. We are open for consultations via phone, facetime, zoom or skype.

 

 

 

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