Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses.
After days of intense discussions, the United Stated government passed the CARES Act that will help employers keep employees on board amid the pandemic and economic crisis. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses. Some of these loans may be forgiven if borrowers maintain payroll during the crisis or restore their payroll afterward.
The administration is set to release more details including a list of lenders offering loans under the program, in the meantime the guidelines to prepare to file for the loan have been release and are shared in detail below:
Businesses that Qualify:
- Have less than 500 employees
- Meets the SBA’s size standard
- 501(c)(3) with fewer than 500 employees
- Individual that operates as sole proprietor
- Individual that operates as an independent contractor
- Individual Self-employed who regularly carries any trade or businesses
- A tribal business concern that meets the SBA size standard
- A 501(c)(19) Veterans Organization that meets the SBA size standard
Lenders will ask you to certify:
- The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations;
- The borrower will use the loan to retain workers and maintain payroll or make mortgage, lease, and utility payments; and
- Borrower does not have an application pending for a loan duplicative for the amount and purpose applied for.
Loans can be up to 2.5 times the employer’s average monthly payroll costs, not to exceed 10 million dollars.
The borrower is eligible for loan forgiveness equal to the amount the borrower spent during the first 8-week period beginning on the date of the origination of the loan, on the following items:
- Payroll Costs
- Interest on the mortgage obligation incurred in the ordinary course of business
- Rent or Leasing Agreements and
- Payment of utilities
If you have questions about the loan process, your options, or establishing a reliable workforce we would be happy to help! Call Farmer, Farmer & Brown Law Firm today at (770) 422-4241 or email us at info@ffbfirm.com to learn more about how to navigate the effect of COVID-19 and the new relief program detailed above.