Forgivable Small Business Loans
One of the greater small business measures in the Stimulus Bill set to be passed by the House and signed today is the FORGIVABLE small business loan program.
We don’t have complete specific guidance on this yet, but in a nutshell, businesses can borrow money to keep employees paid, pay rent and other expenses, to keep the business running.
To me, this makes great sense now for business owners who currently can run their businesses – any business on the “essential” list during this ‘shelter in place’ time. Even if that is at a significantly lower pace than prior to COVID 19.
I would also include any “non-essential” business that is able to find a way to produce income by having employees work remotely while sheltering in place.
For those businesses that are not included in the above, this loan program may greatly assist you when you re-start business some time in the near future -- so you also should look into it to prepare, to be ready to do business, and learn how this would best apply to you, whether that is now or in the very near future.
The greater point is that small businesses now have more choices.
Here’s a video clip of Mark Cuban’s take on the FORGIVABLE loan sent over to me from Stanford Chiropractic that I’d like to share with you.
For further specifics, here’s part of an article by the National Small Business Town Hall:
The stimulus bill’s primary item for small business aid is a $349 billion loan program: Under this “Paycheck Protection Program” the SBA will distribute $349 billion to entities that apply and are approved.
If you’re looking to take part, here’s what you need to know:
Who can apply? Businesses and nonprofits with 500 or fewer employees are generally eligible for the loans. But the loans aren’t restricted to companies: Self-employed workers and gig workers, such as drivers for ride-share apps, also qualify. Qualified borrowers must have been in business before February 15, and must have paid employee salaries and payroll taxes or contractors.
How much? Businesses can receive loans up to $10 million at up to 4% interest rates, depending on how much they paid their employees between January 1 and February 29.
Who’s handling this? Loans will be provided through banks, credit unions, and other lenders, and will be guaranteed by the Small Business Administration. Loan applications should be submitted through lenders who are partnered with the Small Business Administration.
How long with it take? The loan process could become a same-day process as early as next week, in which case loans would be signed and disbursed within 24 hours.
What’s the catch? The program is called “Paycheck Protection Program” because it’s meant to ensure that businesses have the funds to pay their employees and to prevent layoffs. Loans offered through the program are forgivable, if used for their intended purpose: As long as a business receiving a loan maintains the average size of its workforce, it will only need to pay back the interest accrued, and the principal will effectively become a grant.
Here's a link to the full article:
As we learn more specifics about this program, we will pass it on to you,
Please feel free to forward my communications to anyone that might benefit.
Small Business Administration Disaster Relief Loan is Another Option
Previously, we detailed as much as we know about the Stimulus Bill “Forgivable Loan” for businesses.
There is also a pre-existing Small Business Administration disaster relief loan program for individuals and businesses. Though this financing will not be forgivable, it is low interest, and may give you that added extra help that you need.
It may also allow you to re-arrange debt for your benefit.
More than likely, this SBA loan will require more ‘red tape’ than the Stimulus Bill short-term loan, but may be worth it depending on your circumstances.
Now that as a business owner you understand basically the terms, amount, etc. of the Stimulus Bill forgivable loan, consideration can be given to whether the pre-existing SBA disaster loan program is needed or helpful in your situation.
For certain individuals this program may also be helpful.
Here’s the SBA link for more information: