CARES Act Guide: Loans

Apr 23, 2020Business, Covid-19

Emergency Injury Disaster LoanPaycheck Protection Program Loans
Maximum Loan Amount$2 million$10 million
Grant/ForgivenessEmergency grant of up to $10,000, available within three days of EIDL application. Can be used for:
• Providing paid sick leave
• Maintaining payroll
• Meeting increased materials costs
• Paying rent and mortgage
• Repaying obligations
Borrower can request forgiveness of the principal portion of the loan for money used to cover payroll, mortgage interest, rent, and utilities
Interest Rate3.75% for businesses
2.75% for nonprofits
1.00% on balance that remains after forgiveness
Repayment PeriodUp to 30 years2 years for balance that remains after forgiveness
EligibilityMust be directly affected by COVID-19 and fall under one of the following categories:
• Businesses with < 500 employees
• Cooperatives, ESOPs, and tribal small businesses (< 500 employees)
• Sole proprietors, independent contractors
• Businesses and IRC Section 501(c)(3) nonprofits with < 500 employees
• Sole proprietors, independent contractors, and eligible self-employed individuals
• IRC Section 501(c)(19) veterans’ organizations and tribal concerns that meet the SBA size standards
• Businesses with NAICS codes beginning in (72) may be eligible on a per location basis
Must Have Been in Business OnJanuary 31, 2020February 15, 2020
Where to ApplySBA COVID-19 Disaster Assistance PortalLocal bank (but availability varies). Use Nav to fill out application and be matched to lender. https://www.nav.com/paycheck-protection-program-form/
Personal GuaranteeFor loans > $200,000None
Collateral RequirementFor loans > $25,000None
Payment DefermentsOne yearAt least six months
Allowable Uses of FundsItems listed above under Grant/Forgiveness and:
• Pay fixed debts, payroll, accounts payable, and other bills
• NOT intended to replace lost sales/profits
• Cannot be used to pay down long-term debt
• Payroll
• Costs related to group health care benefit continuation
• Salaries, commissions, and other compensations
• Interest on mortgage obligation (but no principal or prepayment)
• Rent
• Utilities
• Interest on pre-existing debt
• Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
Credit RequirementPersonal credit check for all 20% or more ownersNone
Funding TimeframeGrant of up to $10,00 within three days. Next disbursement of $25,000 within a few weeks (projected).Varies
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