The CARES Act, which contains over $300 billion in relief for American workers and small businesses, was passed at the end of March 2020. The goal of the Act is to provide relief options to those who are facing unprecedented economic hardship due to the coronavirus (COVID-19) outbreak. One of these relief options is known as the Paycheck Protection Program (PPP) that was approved to fund the prevention of job loss and small business failure due to the pandemic. With this program, businesses will be able to more easily obtain SBA guaranteed (7)a loans.
Who qualifies for the SBA COVID-19 loan?
In order to qualify for SBA funding, you must be a small business, as defined by the SBA. This includes small businesses or non-profit 501 (c)(3) organizations with 500 or fewer employees, small businesses or 501 (c)(19) veteran’s organizations or tribal concerns that meet the SBA size standards, or sole proprietors or independent contractors. Furthermore, businesses in the food or hospitality industry may also be eligible depending on their location.
How much is the SBA COVID-19 loan for?
The maximum loan amount is 2.5 times the average monthly payroll for the year before the date the loan is made. You can borrow up to $10 million, and the maximum term is ten years. The interest rate for these loans is 1% and requires no collateral. The loans are provided by individual lenders, including banks, credit unions, and some online lenders.
How can the SBA COVID-19 loan be used?
The funds can be used for payroll costs, group health care benefits, employee salaries and commissions, payments of interest on any mortgage obligation, rent, utilities, and interest on any other debt obligations that were incurred before the covered period.
For more detailed information and answers to frequently asked questions regarding loan options, qualifications, loan uses, and loan forgiveness, visit Nav. Nav also provides a CARES Act SBA Loan Calculator to help estimate how much you may qualify for. To fast track your SBA COVID-19 loan application, click here.
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