On Monday, members of ABC HOA had the opportunity to hold a virtual meeting with Congressman Roger Marshall. The Congressman and his staff discussed the current outbreak and provided information on the assistance currently available to small businesses.
Missouri and Kansas small businesses impacted by the coronavirus pandemic can now take advantage of disaster assistance resources from the federal Small Business Administration as well as through the CARES Act.
Please see the below outlines of these loans. It is important to note, a business can apply for both an Economic Injury Disaster Loan as well as a Paycheck Protection Loan, as long as they go to different things. For example, the EIDL for working capital and PPL for payroll expenses.
Economic Injury Disaster Loan (EIDL)
The SBA’s Economic Injury Disaster Loan Program provides targeted, low-interest loans of up to $2 million to small businesses and nonprofits that have been severely impacted by COVID-19.
Loan may be used towards:
- Fixed debts
- Accounts Payable
- Other bills that cannot be paid due to the disaster’s impact
The interest rate is 3.75% for small businesses, with long-term payments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based on each borrower’s ability to repay.
Economic Injury Disaster Grant
Additionally, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
If you are interested in applying for a disaster relief loan, additional information can be found by clicking here.
CARES Act Paycheck Protection Loan
The recently passed CARES act created a new lending product under the SBA’s 7(a) program. The loan is 100% guaranteed by the SBA and will have an interest rate of 4%. Since it’s guaranteed by the SBA, you will have to work with an SBA-approved lender to apply.
Loan may be used towards:
- Payroll costs
- Group health benefits
- Paid sick, medical, or family leave
- Employee salaries
- Rent, mortgage, or other debt obligations
The maximum loan amount will be the lesser of $10 million dollars OR 2.5 times the average monthly payroll for 2019. There is also a max cap of $100,000 per employee for compensation. Paycheck Protection Loans will have automatic deferrals of principal, interest, and fees for 6 months.
What is unique about Paycheck Protection Loans is these loans can be forgiven. If a business is able to demonstrate payroll continuity from Feb 15 to June 30, 2020, they will be able to work with their lender to request forgiveness on the loan. The amount forgiven will be reduced proportionally by any reduction in employees, or by the reduction of employee pay beyond 25% of their prior-year salary. PPL requires that you work with an SBA-approved lender. If a group has not worked with an SBA loan before, they can use this tool to find an approved lender.
In the coming days, we will be outlining other programs available to small business owners to cope with the COVID 19 pandemic, both at the federal and state level. If you have any questions, please contact Heather at Heather@abcksmo.org.