A network of community banks and financial institutions is gearing up to implement one of the most ambitious economic relief programs in U.S. history as small businesses across the country weather the coronavirus and its economic fallout.
The $2 trillion coronavirus relief package signed last week, officially known as the CARES Act, includes nearly $350 billion for a federal small business loan program called the Paycheck Protection Program. The program is designed to get cash in the hands of suffering small businesses quickly, with less red tape and fewer guardrails than the SBA’s existing loan programs. Business groups say lenders are moving as fast as they can to make the loans available.
To learn about the SBA’s other relief programs, visit the SBA’s COVID-19 resource center or follow The Washington Post’s federal disaster relief business loan Q&A.
How do I apply for a small business loan through the Paycheck Protection Program?
The application has been posted on the Treasury Department’s CARES Act resource page. The Small Business Administration has a network of 1,800 approved lenders that process small business loans. If you are interested in a Paycheck Protection Program loan, you should first contact your bank to see if it is an SBA-approved lender. If your bank is not an SBA-approved lender, you can contact the SBA to find one.
When will the new funding be made available to small businesses?
Treasury Secretary Steven Mnuchin said Monday on Fox Business Network that small business loans will be made available starting Friday.
Which businesses qualify under the Paycheck Protection Program?
Small businesses, nonprofits, tribal business concerns that meet the SBA’s standard business size definition and veterans organizations organized under 501(c)(19) with fewer than 500 employees are eligible for loans under the program. Self-employed individuals, independent contractors and sole-proprietors also are eligible. To receive a loan, your company must have been in business as of Feb. 15. If you are in the food service business, the 500-employee cap is applied on a per-physical-location basis, according to a fact sheet published by the U.S. Chamber of Commerce.
How much money can my business receive through the new loan program?
The Paycheck Protection Program provides small business loans of up to $10 million to cover payroll and certain other expenses. Other SBA loan programs, including the federal disaster relief program, offer much smaller loans.
What time period is covered by Paycheck Protection Program loans?
The new loans apply to costs incurred retroactive to Feb. 15 through June 30.
Can the loan eventually be forgiven?
Yes. The act includes loan forgiveness for companies that keep employees on payroll or continue paying bills throughout the coronavirus crisis.
What’s the interest rate?
The maximum interest rate for the Paycheck Protection Program is 4%.