Following President Trump’s signing of the historic Coronavirus Aid, Relief and Economic Security (CARES) Act, Small Business Association Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced Tuesday, March 31, that the SBA and Treasury Department have “initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need,” according to a press release from the SBA.

The CARES Act establishes a new $349 billion Paycheck Protection Program that will “provide much-needed relief to millions of small businesses so they can sustain their businesses and keep their workers employed,” the press release noted.

Carranza said, “This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single point-of-contact for small businesses — the application, loan processing and disbursement of funds will all be administered at the community leve.”
She continued, “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine.”

Mnuchin added, “This legislation provides small business job retention loans to provide eight weeks of payroll and certain overhead to keep workers employed. Treasury and the Small Business Administration expect to have this program up and running by [Friday] April 3 so that businesses can go to a participating SBA 7(a) lender, bank or credit union, apply for a loan, and be approved on the same day.

“The loans will be forgiven as long as the funds are used to keep employees on the payroll and for certain other expenses,” he said.

The new loan program will help small businesses with their payroll and other business operating expenses, and it will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees — all with a 100 percent guarantee from SBA.

All loan payments will be deferred for six months, and the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities and mortgage interest.

Herbert Austin, director of the SBA’s Dallas/Fort Worth District, said, “This is another option for small businesses and non-profits to access to help keep their businesses in business and, most importantly, keep their workforce paid.”

Ahmad Goree, SBA’s DFW District public information officer, added, “The new loan program will be available retroactive to from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.”

Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program.

Loan Terms & Conditions

  • Eligible businesses: All businesses, including non-profits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals and independent contractors with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries.
  • Maximum loan amount: Up to $10 million.
  • Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the eight weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs).

All loans under this program will have the following identical features:

  • Interest rate of 0.5 percent
  • Maturity of two years
  • First payment deferred for six months
  • 100 percent guarantee by SBA
  • No collateral
  • No personal guarantees
  • No borrower or lender fees payable to SBA

Since March 17, SBA has declared all states and territories eligible for Economic Injury Disaster Loan assistance; announced a one-year deferment on Economic Injury Disaster Loans provided due to COVID-19; provided for automatic deferment of previous disaster loans for homeowners and businesses through 2020; waived garnishments through 2020.

Visit SBA.gov/Coronavirus for more information on SBA’s assistance to small businesses.

— Tammye Nash