The federal government has approved the release of small business loans for those affected by the coronavirus pandemic. Nearly $350 billion in loans will be administered by the SBA, including Small Business Interruption Loans for businesses with 500 or fewer employees.
The maximum loan amount (up to $10 million) through the Small Business Interruption Loan is four times the average monthly payments made over the last 12 months for payroll, qualified mortgage payments, and rent. The loan program is available through December 31, 2020. According to Treasury Secretary Steven Mnuchin, small-business owners can apply for the loan through any existing SBA lender, as well as any FDIC-insured institution, credit union or financial-technology lender that has signed up for the program.
Loan recipients may be eligible for loan forgiveness based on the amount equal to the cost of maintaining payroll continuity and other restrictions and calculations. The amount forgiven cannot exceed the outstanding loan and payments are deferred for 12 months, so it may be best to borrow the maximum allowed for your business.
Feel free to contact us for more information and read our latest Bankler Reports for additional overviews of COVID-19-related tax credits and relief. For instance, a Paycheck Protection Program (PPP) and refundable payroll tax credit are available for businesses as well. And, for the next six months, payments do not need to be made on existing SBA loans. More details will be released as they’re confirmed through the SBA’s website.