The CARE ACT passed by the Senate on March 25th proposes potential business saving SBA 7(a) loans for qualified small businesses. The covered period for these loans begins on March 1, 2020 and ends on December 31, 2020.
Who is eligible?
During the period covered, any business concerns that do not employ more than 500 people are eligible. Most nonprofits are also entitled to these loans as well.
How much can you borrow?
The maximum loan amount under this program is the lesser of the product of the average monthly payments for payroll, mortgages, rent, and other debt obligations incurred during the one-year period before the date that the loan is made; by 2.5 or $10,000,000. There are provisions for seasonal businesses.
What can the loan proceeds be used for?
In general, during the period covered, the recipient may use the loan for: Payroll, including paid sick leave, family leave, costs of group health insurance, mortgage interest payments, rent, utilities, and interest on other debt obligations incurred during the covered period.
Will it take a long time to get a loan?
To greatly expedite loans, the Act gives the lender delegated authority to make and approve loans based on an evaluation of the eligibility of the borrower.
What does the lender need to get the process started?
Lenders shall only consider those borrowers that were in operation on March 1, 2020 and paid salaries and payroll taxes to their employees during this time.
When will people know more?
The Act states that guidance will be given no later than 30 days after the date of enactment.