In this week’s episode, we went over SBA loans. We are in the middle of coronavirus season right now and we’ve been getting a lot of questions about SBA loans in connection with the CARES Act. The CARES Act is trying to send a ton of money to the private sector, all these small businesses, sole proprietors, and employers.
So, in this episode, we wanted to talk about how people can accomplish that.
We should lead with that we are not legal experts, we are not CPAs, we’ve not claimed to be. We’re trying to share with you some information and get you on track with where to go.
So, the CARES Act was passed about a week and a half ago. The Small Business Administration is a conduit that is being used to get money from the federal government into all the small communities.
The best resource to go to, in our opinion, is to go right to the SBA website. It’s one we refer to throughout this article and in the video.
So we’ve got the four different programs.
This is for employers with employees, but it also has a component for independent contractors. And as of April 10th, independent contractors can also apply for PPP.
Likely, the PPP is going to be serving, for most people, the businesses with less than 500 employees who need to make payroll.
Essentially, instead of laying people off the government is saying, “Keep your people, we’ll help you pay.”
That’s what this PPP is.
This Payer Protection Program can go up to $10 million. So for companies with up to 500 employees, this can be a big loan.
Restriction wise, as far as we could tell, there isn’t one specific industry that has to qualify or you have to be a part of to prove your hardship.
So the way these loans work, all these SBA loans, is that you want to go through your bank. Most banks are telling us, you have to have your business checking account savings with them. Most businesses have relationships with a bank, so that’s an easy connection piece. We suggest reaching out to your banker and getting a start on this.
This is a $10,000 loan that the SBA would give to you.
While it is a loan, it seems like it might be being converted into a grant. We didn’t get into the exact details, but on the SBA website they’re saying this loan advance will not have to be repaid.
If you’re considering applying, go to their site and check it out.
But basically, our understanding is that you have to demonstrate that you have experienced a loss of revenue due to the coronavirus.
That means a lot of people will likely qualify, so we suggest talking with an expert. The biggest hurdle you might experience with this is getting an accountant on the phone.
The way we understand it is if you have an SBA loan right now you’re already an SBA customer, and that you can quickly, even within days after your application, apply for a loan up to $25,000.
There’s a $10,000 loan option as well you might qualify for. This is for small business that have an urgent need for cash while waiting for a decision and disbursement on the economic injury disaster loans.
This is also for people have an existing SBA loan.
Let’s say you have a $100,000 SBA loan and you’re having a really hard time making payments because of the whole coronavirus issue. This is basically giving you some relief. It’s a forbearance, or as they’re calling it, a deferment.
You can apply and have deferments of payments up to December 31st, 2020. However, interest will continue to accrue on the loan.
This will hopefully help people get back on their feet as this market turns back up and people are able to get out and start spending more money.
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Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.BACK TO LIST