Small Businesses may apply for BOTH of the following:
1. Paychex Relief Program
Question: How does it work?
Currently, the SBA guarantees small business loans that are given out by a network of more than 800 lenders across the U.S. The Paycheck Protection Program creates a type of emergency loan that can be forgiven when used to maintain payroll through June and expands the network beyond SBA so that more banks, credit unions and lenders can issue those loans. The basic purpose is to incentivize small businesses to not lay off workers and to rehire laid-off workers that lost jobs due to COVID-19 disruptions. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the crisis. PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.
Question: What businesses are eligible?
The Paycheck Protection Program offers loans for small businesses with fewer than 500 employees, select types of businesses with fewer than 1,500 employees, 501(c) (3) non-profits with fewer than 500 workers and some 501(c) (19) veteran organizations. Additionally, the self-employed, sole proprietors, and freelance and gig economy workers are also eligible to apply. Businesses, even without a personal guarantee or collateral, can get a loan as long as they were operational on February 15, 2020.
Any business concern that employs not more than 500 employees per physical location of the business concern and that is assigned a NAICS code beginning with 72 (Accommodation and Food Services), for which the affiliation rules are waived.
Affiliation rules are also waived for any business concern operating as a franchise that is assigned a franchise identifier code by the Administration, and company that receives funding through a Small Business Investment Company.
Question: What loan sizes are available?
The maximum loan amount under the Paycheck Protection Act is $10 million, with an interest rate no higher than 4%. No personal guarantee or collateral is required for the loan. The lenders are expected to defer fees, principal and interest for no less than six months and no more than one year.
Question: What are the affiliation rules?
Affiliation rules become important when SBA is deciding whether a business’s affiliations preclude them from being considered “small.” Generally, affiliation exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses.
Question: What Costs are eligible for payroll?
The following costs are eligible:
Question: What costs are not eligible for payroll?
Question: What are allowable uses of loan proceeds?
Loan proceeds can be used for the following:
Question: Where do I apply?
SBA will be updating as more information becomes available.
Take note of distinctions regarding application forms, supporting documentation forms, and home and sole proprietor loan documents. Check “Economic Injury (EIDL)” on the form. You’ll have to provide information like organization type, a Federal EIN, contact information, and personal information related to business owners.
Question: Are loans forgivable?
Recipients of a loan made under the Paycheck Protection Program will be eligible for loan forgiveness in an amount equal to the sum of the following costs incurred and payments made during an eight-week period beginning on the date of the loan origination:
Any loan amounts not forgiven at the end of one year is carried forward as an ongoing loan with terms of a max of 10 years, at max 4% interest.
Question: How do I get forgiveness on my loan?
You must apply through your lender for forgiveness on your loan. In this application, you must include:
Question: What happens after the forgiveness period?
Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 10 years, at a maximum interest rate of 4%. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
Question: Can I get more than one loan?
No, an entity is limited to one loan that will be linked the employers Taxpayer Identification Number.
Question: Where should I go to get a loan?
All current SBA 7(a) lenders are eligible lenders. If you already have a relationship with a SBA lender, please contact them directly. The Department of Treasury will also be in charge of authorizing new lenders, including non-bank lenders, to help meet the needs of small business owners.
Question: How does the new loan coordinate with SBA’s existing loans?
Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.
2. Economic Injury Disaster Loan Program (EIDL)
Question: What is an EIDL and for what is it used?
EIDLs are lower interest loans of up to $2 million, with principal and interest deferment at the Administrator’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
Question: Who is eligible for an EIDL?
EIDLs are now also available to Tribal businesses, cooperatives, and ESOPs with fewer than 500 employees. They are also available to all non-profit organizations, including 501(c) (6) s, and to individuals operating as sole proprietors or independent contractors.
Those eligible for an EIDL and who have been in operation since January 31, 2020, when the public health crisis was announced.
Question: How long are the grants available?
The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.
Question: Can I get the PPP loan if I get an EIDL?
Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
Question: How do I know if my business is a small business?
You will need the 6-digit North American Industry Classification Code (which can be looked up at https://www.naics.com/search/) for your business and your business’s 3-year average annual revenue. Also, you can visit https://www.sba.gov/size-standards/
Question: How do I apply for an economic injury disaster loan?
Applications can be completed online at https://disasterloan.sba.gov/ela/
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