We at Krevolin & Horst know that these are uncertain and difficult times and wanted to let those of you with small businesses know about potential programs for relief.
Expansion of SBA’s 7(a) Loan Program to Support “Paycheck Protection Program” Loans
- Built into the CARES Act, which has been approved by Congress and signed by President Trump.
- Loans are available through June 30, 2020 for small businesses (fewer than 500 employees) in operation on February 15, 2020.
- Maximum loan amount is 250% of your average monthly payroll costs for the 1-year period before the date on which the loan is made, up to $10 million. If you were not in business during such period, you are eligible for up to 250% of monthly payroll costs for January and February 2020.
- Proceeds may be used for payroll, rent, utilities, and certain debt payments, with loan forgiveness for certain payroll costs for a covered period of up to 8 weeks after the loan.
- Any loan amounts not forgiven will be carried forward for up to 10 years at up to 4% interest.
- Principal and interest payments are deferred for 6 to 12 months after disbursement.
- Available through lenders participating in the SBA Loan Program.
Existing SBA Economic Injury Disaster Loans (EIDL)
- Loans of up to $2 million with principal and interest deferment at the SBA’s discretion.
- The interest rate on EIDLs will not exceed 4 percent per year.
- The term of these loans will not exceed 30 years. The repayment term will be determined by your ability to repay the loan.
- Proceeds may be used for payroll and other operating expenses.
- Available directly through the SBA
What Can You Do to Prepare to Apply?
At this time, there is no application or formal process to apply for PPP loans. However, you can start gathering and completing the following items:
- Business tax returns
- YTD month end balance sheet/Profit & Loss Statement
- Personal Financial Statements for Equity Holders
- Accounts Receivable and Accounts Payable Reports
- Debt Schedule
- Excel file itemizing employee wages since February 15, 2019
- SBA Form 1919
If you are interested in the PPP Loans, we would also suggest reaching out to your current bankers to start the conversation. We have relationships with many SBA Lenders in Georgia and are happy to connect you with them.
If you have questions about either loan option or other business or legal issues, please do not hesitate to reach out to Gerry Balboni or Michael Karamat. We are here and want to be a resource for you during this uncertain time. Stay safe and healthy!