Small Business Administrative Loan
May 18, 2020
LOAN OPPORTUNITIES UNDER CARES ACT MAY ASSIST SITE MEMBERS
Small Business Administration Paycheck Protection Program (PPP)
Paycheck Projection Program Application
The recently approved Cares Act, signed by President Trump last week contains provisions SITE members may want to consider applying for in the immediate future. But you may have to act quickly in order to utilize some of the sections.
Congress passed the $2.2 trillion bill as a stimulus to keep employees working and to try and help employers from having to lay-off workers because of the negative impact the coronavirus is having on their business. Even though the construction industry has been deemed an “essential service” in Missouri, Illinois and other states where “stay-at-home” orders have been implemented, there may come at time when contractors cannot work and must dismiss their employees until things improve.
A provision in the Cares Act enacts any small business, defined as any employer with 500 or fewer employees and regardless if he/she has had to lay-off employees, the opportunity to apply for an interest free-loan from the federal Small Business Administration(SBA). The loan provides funds to pay for employees’ wages, health care benefits, retirement benefits, mortgage or rent and utility bills. April 1 was the date applications would begin being accepted.
How to apply? You need to contact the bank or financial institution where you do business or check with your accountant to see if applying is right for you and your company. Any SBA lender or any financial institution can assist you with this, although you may want to try and use an SBA “preferred lender” if possible.
You may in the past have considered using the SBA for a loan, but decided it was too burdensome of a process, with paperwork and other requirements. Not in this bill! The Act requires the SBA to streamline its process by waiving it’s no credit elsewhere provision, waiving personal guarantees and collateral requirements and deferring lenders fees, principle and interest payments for at least six months.
The amount of the loan a business may seek under this program will vary, but as a general rule of thumb, a business may barrow up to 2&1/2 months-worth of payroll, not to exceed $10-million. Portions of the loan may be forgiven at the end of the lending period if the contractor/business helps reduce unemployment.
Even if your company succeeded in getting an SBA loan, but you don’t use funding as originally planned, what are you out? The loans are interest free if you meet the requirements as to how you are using the funds for the intended purpose. If you don’t the interest rate is one/half of one percent, nearly free at the end of the loan period.
Bankers SITE staff have talked with about this program encourage contractors/businesses to act quickly if they want to take advantage of this program as funding will undoubtedly be drained quick. Contact your financial institution or accountant for additional information on this SBA loan program.
Small Business Administration Paycheck Protection Program (PPP)