If your small business has been negatively impacted by COVID-19, the CARES Act may provide you with some relief. The law dramatically reduces the regulatory process required to receive a Small Business Administration 7(a) Loan.
The CARES Act provides the Paycheck Protection Program. Under the law, qualifying business may receive a loan in the amount of 2.5 times their average monthly payroll, up to $10 million. A significant portion of the loan is forgivable if the funds are used to provide payroll for either full or part-time employees.
Effectively, the US government will provide a grant in the amount of 8-weeks of a company’s payroll (including benefits) for the period between February 15, 2020 and June 30, 2020.
Loan proceeds can be used for other qualifying reasons, such as rent; utility payments and loan interest payments. An important aspect of the CARES Act: It is available to sole proprietors, independent contractors and non-profit organizations.
The law also modifies the Economic Injury Disaster Loan (EIDL) program. Because Florida has been declared a disaster area, small business owners can apply for loans up to $200,000 without providing a personal guarantee. Larger, long-term EIDL loans, up to $2 Million, have an interest rate of 3.75%.
Loans made under the CARES Act are non-recourse, meaning borrowers will not be subject to personal liability should their business default. Application fees are waived, and interest shall not exceed 4%.
If you have any questions about how the CARES Act can help your business navigate these difficult times, please contact call Matthew Kenney at 407-693-2050.