Article originally published March 30, 2020
Last updated April 1, 2020
The Small Business Administration (SBA) released a sample of the application which serves as a good starting point in understanding what will be requested along with additional information. Please note that this is a sample because it is expected that each bank will use the document to develop its own information gathering system or application.
We know these are challenging times and that business owners are dealing with many urgent issues right now. One of those key issues is short-term cash flow to cover operating costs while revenue has slowed – or stopped – due to the COVID-19 crisis and related business shutdowns.
Businesses with less than 500 employees currently have two new options for loans through the Small Business Administration (SBA).
- The Economic Injury Disaster Loan (EIDL), a previously-existing SBA disaster loan program. This EIDL program received $8.3 billion in special funding in the Coronavirus Preparedness and Response and Supplemental Appropriations Act, which was enacted on March 6, 2020, in response to the declaration of a federal emergency.
- The new Paycheck Protection Program (PPP), which was included as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act enacted on March 27, 2020. The CARES Act allocates $349 billion for small business owners to apply for loans that can be forgiven if the business hires or retains its workers. The loans are designed to cover eight weeks of a business’s payroll, and can be in amounts up to $10 million under the program.
Depending on the business situation, one of these options may be better than the other, so an analysis is necessary. GBQ’s COVID-19 SBA response team is ready to assist in that analysis.
What is the timeline?
The EIDL application process is currently available through the SBA’s website, though a flood of applications has made this process somewhat challenging.
The CARES Act requires the SBA to issue regulations with guidance for the implementation of PPP loans within 15 days. Treasury Secretary Steven Mnuchin announced this morning that he expects the administration will release documents and instructions later today covering how small businesses can apply for PPP loans, which will be originated by approved SBA banking institutions and credit unions. Lenders are anxiously awaiting SBA guidance so that they can launch their application processes to help small businesses quickly. Treasury also has the authority to approve additional lenders.
How can GBQ help?
GBQ’s COVID-19 response team has dedicated resources to assist business owners in filing for the Small Business Administration relief loans designed to assist small businesses suffering economic harm from the COVID-19 pandemic. Timeliness is essential, as processing times are likely to increase as more businesses apply. GBQ can help you submit a complete, accurate and timely application, assist with calculating your maximum loan amount and with establishing procedures to capture the appropriate documentation to maximize debt forgiveness.