Question of the Week
Am I getting money from the government? – Part II
Happy Five-Minute Friday all! What. A. Week.
The big news this week was the role out of the Coronavirus Aid, Relief, and Economic Security (CARES) that was signed last week. I mentioned that many taxpayers will get rebate checks from the government. This week started the process for businesses to get the help they need. It came from two main loan programs: Economic Injury Disaster Loans (EIDLs) and the Paycheck Protection Program (PPP) Loan
The SBA offers many favorable terms in their EIDLs:
- Loans are up to $2M
- The term is 30 years
- Interest Rates are 3.75% for small business and (2.75% for non-profits)
- The first month’s payments are deferred a full year from the date of the promissory note.
- No proof of payment, personal guarantee or collateral was required
- Borrowers can receive $10,000 in an emergency grant cash advance that can be forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments or repaying obligations that cannot be met due to revenue loss.
The PPP Loan Program was also very generous
- Offered to small businesses with fewer than 500 employees
- Self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply
- Loans are given up to a maximum of the lesser of $10 million, or 2.5 times the average monthly payroll costs – including wages for employees making under $100,000, as well as expenses for paid sick leave, healthcare and other benefits – during the 1-year period before the date on which the loan was made.
- The maximum interest rate under this program is 1%
- The loan term is up to 2 years
- No personal guarantee or collateral is required for the loan
- Payments are deferred up to six months
- Part of this loan may be forgiven and not counted as income to you, if it’s spent during the first week on operating expenses.
May small businesses were excited for this relief and desperately need it. Unfortunately, the rollout has been super messy and businesses still aren’t getting what they need. I’ve been writing a lot about this in my Forbes column. Feel free to read this links if you’d like more information.
- Getting Cash For Your Business Through the CARES Act
- Frequently Asked Questions on Small Business Loans In Coronavirus Relief (CARES) Act
- No Small-Business Relief Yet: False Start on the Paycheck Protection Loan Programs
Quote of the Week
“Failure is simply the opportunity to begin again, this time more intelligently… A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large.” – Henry Ford
Task of the Week
If you are a small business and haven’t started applying for these loans, get on it! They are granted on a first-come, first-serve basis.