Small business owners and independent contractors financially affected by the coronavirus could receive up to eight weeks of cash through loans from the federal government.
Debt through the new Check Payment Protection Program (PPP) will be forgiven with funds guaranteed by the federal government on one condition. “If employers retain their employees, the loans will be forgiven, which would help workers stay employed and help small businesses and our economy recover quickly after the crisis,” said Senator Marco Rubio in a press release. .
This means that the company must use the money for payroll costs, such as wages and cash tips, as well as debt obligations such as mortgages, rents, public services and insurance premiums, the Republican representative from Florida detailed.
Nearly $ 350 billion was approved for this initiative through the bipartisan Senator Rubio Keeping American Workers Paid and Employed Act that is part of the federal rescue package Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Who is eligible for the loan?
To qualify for the loan, you must be a small business owner that employs 500 or fewer employees, Rubio said in an information document about the program.
Restaurants, hotels, or businesses are also eligible within the North American Industry Classification System (NAICS) code 72, “Lodging and Food Services,” and has multiple locations with 500 or fewer employees.
Tribal companies, veterans’ organizations categorized as a 501 (c) (19) and 501 (c) (3) non-profit organization, including religious organizations, will be eligible for the program.
In addition, independently owned franchises with fewer than 500 employees, approved by the SBA, are also eligible.
Independent contractors and ‘ gig economy ‘ workers qualify for the Check Payment Protection Program.
In addition, aid is available even to entrepreneurs who have applied for the bridge loan, a short-term loan, through the state.
You can apply if you obtained an Economic Injury Disaster Loan (EIDL) related to COVID-19, but only if the management was done before the PPP was available.
How to apply for a PPP loan
Applications will be processed through the thousands of “preferred lenders” under the Small Business Administration (SBA) that comprises more than 1,000 lenders, including 800 banks. “I am also committed to working with the SBA and the Treasury Department to enable them to quickly incorporate new bank and non-bank lenders into the program. From the beginning, our primary focus has been to provide cash to small businesses and their employees as quickly as possible, “said Rubio.
You can call your bank directly or find SBA-approved lenders in your area through the SBA website . You can also call a Small Business Development Center or the Women’s Business Center in your area and they will provide free assistance.
The funds are a bipartisan effort developed with Senators Susan Collins, R-Me., Lamar Alexander, R-Tenn., Ben Cardin, D-Md. and Jeanne Shaheen, DN.H.
What is the maximum amount I can borrow?
A small business can ask for up to 250 percent of its average monthly payroll expenses, up to a total of $ 10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amount to make debt obligations payments, according to Rubio, who serves as chairman of the Small Business and Entrepreneurship Committee.
This 8-week period can be applied to any time between February 15, 2020 and June 30, 2020.
Interest rates and loan terms to be paid
It is important to understand that the maximum loan terms include a 10-year term with interest limited to 4 percent and a 100 percent loan guarantee from the SBA.
You will not have to pay any fees for the loan, and warranty requirements and personal guarantees are waived.
Loan payments will be deferred for at least six months and up to one year from the loan start date.
The application deadline for the Check Payment Protection Program is June 30, 2020. Small businesses and lenders can send their questions to PPPquestions@sbc.senate.gov .