Did you get a chance to tune into the CARES Act & SBA Loans webinar yesterday? If not, you can still get all the information you need. Use the link below to watch the recorded webinar with DMP's Vice President of Marketing Mark Hillenburg, DMP's CFO Chris Stange and Bill Dunton of Abacus CPAs below.
President Trump signed the CARES (Coronavirus Aid Relief and Economic Security) Act Friday, March 27, 2020. The CARES Act provides significant relief in terms of financial assistance to nonprofits, businesses and individuals, including new and expanded Small Business Administration loans. Click here for a summary of the full act.
We will continue to monitor and keep you updated on the impact of this bill and other regulatory changes.
Expansion of SBA Programs and Assistance to Small Businesses
If your business has been negatively affected by the shutdown, there are two options for SBA Loans. We specifically want to inform you of the Paycheck Protection Program.
SBA Paycheck Protection Program
This is the newest SBA loan program enacted into law on March 27. These loans will be made by SBA approved lenders.
The Paycheck Protection Program includes loan forgiveness provisions, which means you won’t have to pay it back. In this program, you can refinance previous SBA loans. You can borrow a maximum of $10 million or your average monthly payroll from the previous year x2.5 plus other approved refinancing, whichever is less. The interest rate will be maxed at 0.5%, and the term of the loan is 2 years. SBA lending fees will be waived, and they do not require collateral.
To be eligible for forgiveness in this program, the money must be spent in the first 8 weeks after the loan is approved. The funds must be spent on payroll, interest on mortgage payments, rent and utility payments. Forgiven amounts are not included as taxable income. There are other provisions to qualify for forgiveness that you should work with a qualified CPA and your lender to determine.
Deadline to apply is June 30, 2020. Please keep in mind that you cannot combine this and the 50% Retaining Payroll tax credit. (To qualify for the Retaining Payroll Tax Credit, businesses have to prove they took a 50% loss compared to the same quarter in years past. And to keep companies from double-dipping on aid under the bill, employers won’t be able to get special SBA loans if they opt for the tax credit.)
The application for Paycheck Protection Program loans under the CARES Act is now live on the Treasury website (https://home.treasury.gov/cares).