UPDATE: Information for Small Businesses about the Payment Protection Program from the U.S. Treasury click HERE. (4/3/2020)
Washington, D.C.—U.S. Senator Susan Collins announced today that the Small Business Administration (SBA) and the Department of Treasury released new information that will allow lenders to begin accepting applications and disbursing loans to assist small employers that have been harmed by the COVID-19 pandemic.
These Paycheck Protection Program loans were created by the Keeping American Workers Paid and Employed Act, which was authored by U.S. Senators Susan Collins (R-ME), Marco Rubio (R-FL), Ben Cardin (D-MD), and Jeanne Shaheen. Their legislation was included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and signed into law on March 27, 2020. Yesterday, Senators Collins, Rubio, Cardin, and Shaheen sent a letter to SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin, requesting immediate action to implement the new law.
The loan program will help small employers with their payroll and other covered business operating expenses for eight weeks. Small businesses and eligible nonprofit organizations, veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they have 500 employees or fewer or otherwise meet the SBA’s employee-based size standard for their industry. Additionally, restaurants, hotels, and other businesses that fall within North American Industry Classification System code 72, “Accommodation and Food Services,” are eligible if each of their locations has 500 employees or fewer. The SBA’s affiliation rules are also waived for independently owned franchises that are approved by SBA.
The Paycheck Protection Program will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees – all with a 100% guarantee from SBA. All loan payments will be deferred for six months. Most important, if an employer maintains its payroll, the portion of the loan used for payroll (up to annual rate of salary of $100,000 per employee) and covered mortgage interest, rent, and utility payments will be forgiven.
Every day, I am hearing from small business owners who are anxious about the future of their businesses and how they can continue to pay their employees due to the economic harm caused by COVID-19,” said Senator Collins. “As members of the Small Business Task Force, Senators Rubio, Cardin, Shaheen, and I worked day and night on this bipartisan $350 billion small business economic relief plan. I am pleased that the SBA and Treasury have released information that will begin allowing this desperately needed relief to reach small businesses to help prevent them from going under and to help save millions of Americans’ jobs.”
The new loan program runs through June 30, 2020, and will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees. Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply.
Small businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Small business owners should consult with their local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.
SBA encourages small businesses to apply as quickly as they can because there is a funding cap. Additional information is available from the U.S. Treasury HERE.
For a full list of resources available from the SBA, please visit their coronavirus website.