I’ve been asked a lot about loan options and relief for business through the SBA program. I am no expert on your banking options. After reading some of these options you need to reach out to your banker for what options will work for you. I’m only writing this to give you an idea of what is available for you to follow up with your trusted bank.
Paycheck Protection Program
This loan program provides loan forgiveness for retaining employees. SBA will forgive loans if all employees are kept on the payroll for eight weeks. Also the money must be used for payroll, rent, mortgage interest, and utilities. You can apply for this starting April 3, 2020 through lenders who are eligible to issues SBA loans. This program will be available through June 30, 2020. There are specific terms of what this should be used to pay for it to be forgiven or it turns into a 2-year loan. The loan is based on your prior year payroll costs. To apply you must have fewer than 500 employees.
Economic Injury Disaster Loan Emergency Advance
This will provide $10,000 of relief to businesses that are experiencing temporary loss of revenues. You must have less than 500 employees. This advance will not need to be repaid.
SBA Express Bridge Loans
This is for businesses who already have a relationship with SBA Lenders to access up to $25,000. These loans can bridge the gap while applying for an SBA Economic Injury Disaster Loan. This loan will be repaid in full or in part by the SBA Economic Injury Disaster Loan. See our post on this type of loan at https://wassmancpaservices.com/small-business-disaster-loan-assistance/
SBA Debt Relief
This is for small businesses, to help cover the payments of existing SBA loans. It has additional relief in that if your disaster loan had the status of “regular servicing” as of March 1, 2020 the SBA is providing automatic deferments through December 31, 2020. The interest will continue to accrue. The monthly payment notice will still be mailed for anybody who still wants to pay monthly. It will not cancel any automatic payments you will need to do that. After the deferment period the borrower is expected to resume regular payments.
As I said I’m no expert on these loans or any loan. If your business is experiencing difficulties you should reach out to your banker to see what options are available. As an accountant we are helping our clients gather information as needed. For you, the business owner, these loans or relief items are legally binding agreements. You need to determine if is it the right fit for you.
The Wassman CPA Services website and blog is meant to offer general information to our readers. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service. You should contact Wassman CPA Services for advice concerning specific matters prior to making any decisions.