Relief for Small and Medium Sized Businesses
The CARES ACT established the Paycheck Protection Program (PPP) within the Small Business Administration (SBA) to help provide immediate cash-flow assistance to small and medium sized businesses negatively impacted by COVID-19. Through SBA-administered 7(a) loans, employers will be able to support payroll costs, paid sick or family leave, insurance premiums, rent, and interest on mortgage obligations. Each loan is backed by a government guarantee. If employers maintain their payroll during a 8 week period, then a portion of the loan will be eligible for forgiveness.
Employers who have already laid off workers will able to bring back these employees, as the program is retroactive to February 15, 2020.
Eligible employers include:
- Employers with 500 employees or fewer; as well as employers meeting SBA’s size standards
- 501(c)(3) nonprofits, 501(c)(19) veteran organizations, or Tribal business concerns with fewer than 500 employees
- Self-employed individuals, sole-proprietors, independent contractors, and other “gig” workers
- Waives affiliations rules for businesses in the hospitality and restaurant industries, SBA-approved franchises, and businesses that receive financing through the Small Business Investment Company (SBIC) program.
More details on the Paycheck Protection Program
The size of a 7(a) loan would equal 250% an employer’s average monthly payroll. The maximum loan amount is $10 million.
Loans are available through more than 800 existing Small Business Administration lenders, including banks, credit unions, and other financial institutions.
The cost of participating in the program is reduced for both borrowers and lenders by providing fee waivers, and automatic deferment of payments for one year, and no repayment penalties.
If borrowers received an Economic Injury Disaster Loan (EIDL) related to COVID-19 between January 31, 2020 and the date at which the PPP becomes available, they are able to refinance that EIDL into a PPP loan. However, borrowers may not take out an EIDL and a PPP for the same purposes.
Small business development centers will provide counseling, training, and education on SBA resources to business owners affected by COVID-19.
Agricultural producers are eligible to participate in the Paycheck Protection Program. More information here.
More information here on the Paycheck Protection Program provided by the Senate Committee on Small Business and Entrepreneurship.
The Chamber of Commerce has resources available to help business owners understand what is available.
To apply for assistance, visit the Small Business Administration’s website.