Responding to the global Coronavirus pandemic, the federal government enacted the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) which allocates billions of dollars to assist corporations, small businesses, and individual families. Over one-third of a billion dollars has been allocated for small business loans, that may be forgiven provided certain conditions are met by the borrower.
The application window opened on April 3rd for small business and sole proprietorship. On Friday, April 10th, the application window will open for independent contractors and self-employed individuals. The loans can be used to cover primarily 8-weeks of payroll costs; however, other business expenses are includable in the loan, including rent and utilities.
Even though the first application window has opened, and scores of businesses are starting the application process, the federal government and lending institutions are having to race to put proper protocols in place to handle the swell of borrowers.
Steps you can take now!
- Your current bank is likely an SBA lender, you can check by visiting the U.S. Small Business Administration. SBA lenders will likely be the most efficient; however, there are other qualified lenders including federally insured credit unions. Once you have selected a lender, reach out and request an application. You can access a copy of the PPP application by visiting U.S. Treasury’s PPP Application.
- Collect important payroll and company documentation including payroll calculations, company formation documents, owners’ driver’s licenses and identifications, information regarding owners’ other owned businesses, etc.
- Complete an application with your selected lender before the June 30, 2020 deadline.
- Get your 8-digit “Loan Submitted Number” from your lender.
- If your business has more than 500 employees, you are mostly likely not qualified as a small business, and will need to check the SBA’s size standards to determine if you can still participate in the PPP.
Your lender may have additional demands for documentation, so borrowers are encouraged to connect early with the lender of their choosing and start the process soon. With the flood of businesses seeking relief, processing loan applications is expected to be a tedious and drawn out endeavor.