03 Apr Getting Your Share of the $350 Billion in Forgivable Loans to Keep Your Business in Business
- The offer applies to small businesses with less than 500 employees.
- Businesses can use funds to meet qualified payroll costs, make lease or mortgage interest payments, and pay utilities.
- Businesses can request up to 2.5 times payroll for eight weeks, up to 10 million dollars.
- Loan forgiveness might be available for qualified expenses.
Millions of businesses closed due to mandatory shutdowns, making government intervention to prevent these businesses from permanently closing their doors a priority. Within the recently passed CARES Act is the Paycheck Protection Program that offers financial assistance to qualifying small businesses to help pay for operating costs during this critical time.
Does Your Business Qualify for Financial Help Through the Paycheck Protection Program?
The legislation defined small businesses as companies with less than 500 employees and hospitality companies with less than 500 employees in a single location. It also includes non-profits, self-employed workers, independent contractors, and sole proprietors.
What Other Qualifications Must You Meet to Receive a Loan?
You may not secure multiple loans for the business to cover the same expenses and agree to use the funds for qualified expenses detailed in the legislation. The loans do not require collateral or a personal guarantee and come without annual fees or loan guarantee fees.
Having other SBA loans will not disqualify you from receiving assistance through the Paycheck Protection Program.
The SBA will administer the loans through the existing banking network, which includes 1,800 banks, credit unions, and some nonbank lenders. Businesses should work with their current bank to apply for assistance. Lenders are also offering online applications.
How Much Money Can Your Business Receive?
The formula calculates the average monthly payroll based on the previous 12 months. You can request 2.5 times the average payroll for an eight-week period, up to a maximum request of $10 million.
How Can Your Business Use the Funds to Qualify for Loan Forgiveness?
Congress designed the program to cover eight weeks’ worth of essential business costs beginning on the date of the loan origination. To qualify for loan forgiveness, you must restrict the use of funds to cover qualified payroll expenses, utilities, the lease payment on the business property, and the interest on the mortgage payment.
The amount forgiven will be lower if you reduce staff or lower employee wages by more than 25% based on the previous quarter. Rehiring workers to reach the required limits will avoid the loan forgiveness penalty.
At the end of the eight-week period, you must submit the required documentation to the lender for loan forgiveness. Decisions can take up to 60 days.
What are the Terms of The Loan?
The repayment of unforgiven amounts can extend for up to ten years at a rate of no more than 4%.
Existing SBA loans could qualify for temporary interest forbearance.
When Can a Business Apply?
Lenders are accepting applications beginning Friday, April 3, 2020. SBA approved lenders will disperse loans on a first-come, first-serve basis until the funds run out.
As with any government assistance, there is a mountain of details and a number of exceptions that could affect qualifications and the amount you will receive. If you are interested in obtaining financing to keep your business operating during the shutdown, contact your bank to apply.
About Titan Consulting Group
Titan Consulting Group helps consumers evaluate various debt relief options and choose the right program that best fits their short-term and long-term financial goals. We work with consumers seeking debt consolidation loans, or who may be considering options like debt negotiation or bankruptcy. Through our network of partners, we can help you find the right solution to reach your goals and get back to living a life free from high interest credit card debt.
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