Small businesses will start to see assistance available from the recently enacted CARES Act.
Illinois Senator Tammy Duckworth held an online town hall discussion Tuesday afternoon to discuss the act and answer questions from constituents.
Duckworth says that $350 billion has been made available for the Small Business Administration Paycheck Protection Program, which she says is designed to give small businesses incentive to keep their employees on the payroll.
“The program will provide cash flow assistance through 100% federally guaranteed loans for employers who maintain their payrolls during this emergency. If you maintain your payroll, the loans will be forgiven. Which would help workers remain employed as well as help the small businesses. So payments are going to be there for small businesses so if you hire back all of your workers. This will help the economy to snap back quicker after the crisis.”
The program is for any small business affected by the coronavirus that has less than 500 employees, including sole proprietorships, independent contractors and people who are self-employed. The program is also available for private non-profit organizations or 501(c)(19) veterans organizations.
Duckworth says that the program has provisions to wave some or all of the costs, and can be back dated to include all businesses that may have been effected by COVID-19.
“This has a lot of really good features such as forgiveness of up to eight weeks of payroll, based on employee retention and salary levels. There are no S.B.A. fees, there are at leas six months of deferral with maximum deferrals of up to one year.
Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19, and you can do this between February 15th of this year and June 30th of this year. This program will be retroactive to February 15th of 2020 in order to help bring workers who may have already been laid off, back onto payroll.”
Duckworth says that the program will be available long after the act became law, but small business owners will want to take advantage of the program sooner than later if at all possible.
“The loans are available through June 30th. $17 billion is available for immediate relief to small businesses with non-disaster S.B.A. Loans. In particular that is the 7(a)/504 loans, and microloans. Under it, the S.B.A. will cover all loan payments on these loans, and that includes principle, interest and fees for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.”
According to the U.S. Small Business Administration website, business owners can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
Lenders may begin processing loan applications as soon as April 3, 2020.
For more information, go to the Small Business Administration website, at sba.gov.