As an update to the March 25, 2020 post Stay Informed: How Small Businesses Can Apply for Loans, the Emergency Assistance Bill that passed the Senate today will, if passed by the House, contain provisions that are likely to provide substantial short-term and long-term relief to many small businesses.
Significant Updates for Small Businesses
1. Regarding loans made pursuant to the Small Business Act in response to the COVID-19 pandemic, the Administrator shall (1) waive personal guarantee requirements for loans under $200,000; (2) waive the requirement that an applicant needs to be in business for the 1-year period before the disaster; and (3) waive the requirement that an applicant is unable to obtain credit elsewhere.
2. Before any funds are disbursed, a potential recipient may receive an advance of up to $10,000 upon completion of a certification under penalty of perjury. Even if the loan application is subsequently denied under section 7(b)(2) of the Small Business Act, any applicant that receives an advance will not be required to repay the amount received. Instead, that initial advance can be used for purposes that include, but are not limited to, maintaining payroll, providing sick leave to employees, and making rent or mortgage payments.
3. If an applicant uses its $10,000 advance to fund payroll, then the amount of the advance will be reduced from the total forgiveness amount for an approved loan.
4. The Senate has appropriated $10 billion dollars to fund these loans.
SBA’s current fact sheet describing the Disaster Loan program prior can be accessed at https://www.sba.gov/sites/default/files/articles/sba-disaster-loans-faq.pdf. Information regarding the Payroll Protection Loan Program will follow shortly.