Do Not Risk Your Business. Find Out if You Are Eligible for the Small Business Administration (SBA) Loans.
With the stay at home order, many businesses are seeing slow, or even no, sales. Employees may not be allowed to work, or customers may be staying home. Right now, businesses need economic assistance. The CARES ACT SBA 7(A) Loans are a form of relief created by Congress.
The pandemic has affected a lot of businesses. One of the major effects has been a loss in revenue. Companies, especially small and local businesses, rely on each month’s revenue. These same stores still have bills to pay. Most shops are having trouble keeping up with their financial needs. They are also struggling to keep their long-term capitalization requirements.
The CARES Act stands for “Coronavirus Aid, Relief, and Economic Security”. It was passed by Congress and signed by President Trump on March 27th. It provides over $2 trillion in economic relief. This act helps protect public health by providing funding to workers, families, and small business.
The CARES Act can be broken down into 4 sections. The first section is Assistance for American workers and families. This is the stimulus check that went out to tax-paying citizens. The second section is preserving jobs for American industry. This helps job creators support employees while they wait to open again. The next section is assistance for state and local governments. This helps cover COVID-19 related expenses that governments face. The last section, and the one we are focusing on, is small business assistance. We will be looking at the CARES ACT SBA 7(A) loans. We will cover what it is used for, who is eligible, what the timeline is, and how to apply.
How Can This Be Used?
The funds from these loans can be used for a number of things. These funds can help pay your employees. Use it for salaries, sick leave, or medical leave. The SBA 7(A) loan can be used for debt payments, rent, or mortgage. This loan can be forgiven if used for payroll costs between March 1st, 2020 and June 30th, 2020. If it is forgiven, then it will be taxed as forgiven debt.
Who Is Eligible?
You must be a small business, with less than 500 employees. The only exception are businesses in specific industries that are recognized by the SBA to allow more than 500 employees. Your business must be for profit, not-for-profit, or a veteran organization. You may not receive Medicaid reimbursement. It is not just small businesses. Sole proprietors, independent contractors, or the self-employed are eligible. You will need to show that you were operational on February 15th, 2020 and had employees with paid salaries. You will also need to show how your business was substantially impacted by COVID-19.
What Is The Timeline?
The SBA is providing small businesses with financial resources. The SBA 7(A) loan period started on February 15th, 2020. It will continue to December 31st, 2020. The limits of these loans will increase from $5 million to $10 million. The limit for the SBA Express loan program will almost triple. They will go from $350 thousand to $1 million by the end of December 2020.
How Do I Apply?
The SBA should publish guidance on this topic. However, it is likely that SBA 7(A) loans will be sought through approved local lenders. Approved local lenders include banks, credit unions, and other approved lenders. You will need to contact your local lender to determine the exact process. It is anticipated that applicants will need to complete a few forms. They will need to complete the SBA application and the required addenda. They will also need to provide the required documentation. Applicants will need to make a good faith certification that their business has been affected by COVID-19 and that the loan will be used for worker retention, payroll expenses, and the payment of other business debts. Applicants will likely need to provide documentation. The exact process may change. However, the regular SBA 7(a) loan application and requirements can be found here.
The COVID-19 outbreak and pandemic are very stressful for many American families and businesses. This virus does not need to close your business. You have options. The resources that are now available through the CARES ACT can help. The goal of the CARES ACT SBA 7(A) loans is for companies like yours to be able to grow during this slow market period. Want more information on this topic or on SBA Economic Injury Disaster Relief Loans? We have another page of information on these topics. Learn more about COVID-19 SBA loans.