Late last week, the Federal Government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This $2 trillion relief package covered a number of areas, with $350 billion specifically set aside to help businesses like yours.

The United States Small Business Administration (SBA) has not yet published guidance or established the process for businesses to apply for loans or relief. While we are waiting for specific guidance from the SBA, we want to make sure you have the information we know at this time so you can begin your path forward. Please keep in mind that these are general guidelines and subject to final rule-making and eligibility requirements from the SBA.

WHAT WE KNOW NOW

  • Bank of Pontiac is an approved lender.
  • To qualify, companies and nonprofits must have fewer than 500 total employees, including all affiliates, subsidiaries and companies under common ownership. Certain exceptions apply for small businesses in the food service sector, franchises and SBIC-financed businesses.
  • You can apply for both an Economic Injury Disaster Loan (through the SBA) and a Payroll Protection Program Loan, but there may be no duplication in the use of funds.
  • The maximum loan amount is 2.5 times your monthly payroll, up to $10 million, with a maximum interest rate of 4%.
  • A portion of the loan can be forgiven. Subject to certain restrictions, the portion of the loan eligible for forgiveness can include payments made during an eight-week period following your loan funding (the eight weeks cannot go beyond June 30, 2020) for the following: payroll and benefits, interest payments on mortgages, rent payments, health insurance, and utility payments.
  • These will be unsecured loans that do not require personal guarantees.
  • You may be able to defer payments up to 12 months.

WHAT YOU CAN DO NOW

  • DO NOT FILL OUT ANY FORMS YET. THE SBA HAS NOT YET PROVIDED THE APPLICATION PROCESS.
  • Identify and compile records for those expenses that can be covered by the program.
  • If you’ve already had to reduce your workforce due to COVID-19, determine if you would like to rehire them.  They will be covered.
  • Collect the documentation you typically need for a loan application:
    • Financial statements – Interim 2020 income statement and balance sheet and full year 2019 income statement and balance sheet
    • Tax Returns – last three (3) years of federal returns for business
    • 2019 payroll information
    • 2020 YTD payroll information
    • Current organizational documents – Bylaws, articles and operating agreements
    • General liability insurance information
    • Current building lease & any amendments

Watch for updates. The SBA will provide processes and forms as this week progresses.