Coronavirus Aid, Relief, and Economic Security Act
In an attempt to assist businesses with the recent coronavirus shutdown, the Senate passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which awaits final approval. With respect to business lending, the Act increases the maximum Small Business Administration’s 7(a) loan amount to $10 million and would expand allowable uses of 7(a) loans to include payroll support (including paid sick or medical leave), employee salaries, rent or mortgage payments, insurance premiums and any other debt obligations.
The maximum loan amount is the lesser of $10mm or four (4) months operating expenses (rent, payroll, etc.), though that determination is outstanding. These costs (payroll, rent/mortgage, utilities) may be forgiven for an eight (8) week period starting at the time of loan origination through June 30, 2020. The balance of the loan would be termed/amortized and due presumably in monthly installments thereafter. This program is in addition to the current SBA EIDL Loan Program. Congress mandated private banks implement the new program, as the SBA EIDL program has dealt with roll-out issues due to under staffing at the agency.
Please click here to read more on this bill.
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