With $349 Billion in Emergency Small Business Capital Cleared, SBA and
Treasury Begin Unprecedented Public-Private Mobilization Effort to Distribute
Funds
WASHINGTON – Following President Trump’s signing of the historic
Coronavirus Aid, Relief, and Economic Security (CARES) Act, SBA Administrator
Jovita Carranza and
Treasury Secretary Steven T.
Mnuchin today announced 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.
The CARES Act establishes a new $349 billion Paycheck Protection Program. The
Program will provide much-needed relief to millions of small businesses so
they can sustain their businesses and keep their workers employed.
“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 level,” said Administrator Carranza. “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.”
“This legislation provides small business job retention loans to provide eight
weeks of payroll and certain overhead to keep workers employed,” said
Secretary Mnuchin. “Treasury and the Small Business Administration expect to
have this program up and running by April 3rd 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.”
The new loan program will help small businesses with their payroll and other
business operating expenses. It 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 importantly, 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.
The Paycheck Protection Program is specifically designed to help small
businesses keep their workforce employed. Visit SBA.gov/Coronavirus for more
information on the Paycheck Protection Program.
The new loan program will be available retroactive from Feb. 15, 2020, so
employers can rehire their recently laid-off employees through June 30, 2020.
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 8 weeks following the date of loan
origination (due to likely high subscription, it is anticipated that not more
than 25% 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%
-
Maturity of 2 years
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First payment deferred for six months
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100% guarantee by SBA
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No collateral
-
No personal guarantees
-
No borrower or lender fees payable to SBA
SBA’s announcement comes on the heels of a series of steps taken by the Agency
since the President’s Emergency Declaration to expeditiously provide capital
to financially distressed businesses affected by the Coronavirus (COVID-19)
pandemic. Since March 17, SBA has taken the following steps:
Visit SBA.gov/Coronavirus for
more information on SBA’s assistance to small businesses.