Business groups say lenders are moving as fast as they can to make the loans available.
“Right now our focus is on speed in terms of making sure these banks have the ability to get loans onto main street quickly,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, a lobbying group that is working with lenders who will be distributing the funds, which are backed by a federal loan guarantee.
The new loan program is separate from existing federal loan programs, including the Small Business Administration’s disaster relief loans. To learn about the SBA’s other relief programs, visit the SBA’s covid-19 resource center or follow The Post’s federal disaster relief business loan Q&A.
Here are the details on how small-business owners can access the new federal Paycheck Protection Program. This article will be updated as new information is made available.
The application has been posted on the Treasury Department’s CARES Act resource page. The Small Business Administration has a network of 1,800 approved lenders that process small business loans. If you are interested in a Paycheck Protection Program loan, you should first contact your bank to see if it is an SBA-approved lender. If your bank is not an SBA-approved lender, you can contact the SBA to find one.
As of Tuesday afternoon the SBA’s information page on the Paycheck Protection Program did not include a list of approved lenders, and the agency had not indicated whether and when it would add that feature.
Treasury Secretary Steven Mnuchin said Monday on Fox Business Network that small business loans will be made available starting Friday. Detailed instructions on how to apply for them are to be added to the Small Business Administration’s website Monday, Mnuchin said. Mnuchin has said in the White House’s daily news briefings that a system will be set up for same-day loan evaluation.
As of Tuesday afternoon the SBA still had not published detailed program guidelines, however. An SBA spokesman said as of 2pm that the agency would do so “soon,” noting different agencies within the government are still ironing out specifics of the program.
Mnuchin has said in the White House’s daily news briefings that a system will be set up for same-day loan evaluation.
However, Hicham Oudghiri, chief executive of a small-business-focused data analytics and fraud detection company called Enigma Technologies, said it would be difficult for most banks to meet that target without substantially increasing the risk of fraud. Most small businesses will take days just gathering the documents they need to apply, he said.
“Even the most sophisticated banks will have a hard time short cutting their processes to get money out the door this fast,” Oudghiri.
Small businesses, nonprofits, tribal business concerns that meet the SBA’s standard business size definition and veterans organizations organized under 501(c)(19) with fewer than 500 employees are eligible for loans under the program. Self-employed individuals, independent contractors and sole-proprietors also are eligible. To receive a loan, your company must have been in business as of Feb. 15.
If you are in the food service business, the 500-employee cap is applied on a per-physical-location basis, according to a fact sheet published by the U.S. Chamber of Commerce.
There are criminal penalties for submitting false information on loan applications.
The Paycheck Protection Program provides small business loans of up to $10 million to cover payroll and certain other expenses. Other SBA loan programs, including the federal disaster relief program, offer much smaller loans.
The new loans apply to costs incurred retroactive to Feb. 15 through June 30.
Yes. The act includes loan forgiveness for companies able to keep employees on payroll or continue paying bills throughout the coronavirus crisis.
The amount of loan forgiveness will include payroll costs for individuals below $100,000 in annual income, mortgage and rent obligations, including interest and utility payments. The total amount will be reduced if your workforce is drawn down through attrition or if wages are reduced. If you are forced to lay off employees because of economic conditions, you may be able to preserve some of your loan guarantee by hiring them back.
Eligibility for loan forgiveness starts eight weeks after the loan origination date. There is a maximum 10-year maturity after application for loan forgiveness.
The maximum interest rate for the Paycheck Protection Program is 4 percent.
Yes. Businesses that have pending or existing SBA disaster assistance loans can still receive funding through the Paycheck Protection Program as long as the loans are being applied to different cost centers. You also can still apply for a loan if you have an insurance claim pending.
Loans through the Paycheck Protection Program can cover payroll costs, mortgage and rent payments, and health-care benefits for employees, including paid sick leave. In some cases they also can cover interest on other debts.
The Small Business Administration has made all deferments through Dec. 31 automatic. That means small-business owners do not have to contact the SBA to request deferment.
If you would like to suggest an additional question for this article, please email the author at Aaron.Gregg@washpost.com.
Your primary points of contact for information on federal loan programs should be the U.S. Small Business Administration or an SBA-qualified financial institution. You can reach the SBA by email at email@example.com or by phone at 1-800-827-5722. The agency has reported receiving “unprecedented” interest in its loan program in recent weeks but is working to set up new call centers to handle the flood of new inquiries.