Courtesy / U.S. Department of the Treasury
U.S. Treasury Secretary Steven Mnuchin
April 1, 2020
SBA to have $349B payroll stimulus program up and running this week
By Brad Kane, Worcester Business Journal
The U.S. Small Business Administration announced Tuesday evening it has begun mobilization of banks and other lenders to distribute $349 billion to businesses with 500 or fewer employees, in a program largely designed to help the companies avoid layoffs and rehire staff amid the economic crisis caused by coronavirus measures.
U.S. Treasury Secretary Steven Mnuchin said he expects the SBA to have the program up and running by Friday, and businesses should be able to apply for a loan and be approved on the same day at any SBA 7(a) lender, bank or credit union.
The Paycheck Protection Program was part of the $2-trillion stimulus package passed by Congress and signed into law by President Donald Trump last week.
“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," said SBA Administrator Jovita Carranza in a press release. "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.”
Courtesy / U.S. Small Business Administration
SBA Administrator Jovita Carranza
The main tenets of the program provide businesses with loans of up to $10 million to cover payroll costs, rent, utilities, and mortgage interest. Businesses may make the loans retroactive to Feb. 15 and can rehire their recently laid-off employees through June 30 to receive the money to cover the cost.
Businesses who receive loans can have a portion of their borrowing forgiven: the portion of operating expenses in the eight weeks following the date of loan origination. Because the SBA expects high demand for these loans, only 25% of the forgiven part of the loan will cover non-payroll costs.
All loans will have identical features: an interest rate of 0.5%, maturity of two years, first payment deferred for six months, 100% guarantee by SBA, no collateral, no personal guarantees, and no borrower or lender fees payable to SBA.
Those eligible to apply include for-profit businesses, nonprofits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals, and independent contractors.
Editor's Note: The Worcester Business Journal, a publication of New England Business Media, is an affiliate of Mainebiz.
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