CARES Act Establishes $349 Billion Paycheck Protection Program for Small Businesses

WASHINGTON – April 1, 2020 – Following President Trump’s signing of the historic Coronavirus Aid, Relief, and Economic Security (CARES) Act, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin today announced the SBA and Treasury Department have initiated a robust mobilization effort of banks and other lending institutions to provide small businesses with the capital they need.

The CARES Act establishes a new $349 billion Paycheck Protection Program, which provides small businesses the ability to sustain their businesses and keep their workers employed.

The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.

Loan Terms & Conditions

-Eligible businesses: All businesses, including non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees, or no greater than the number of employees set by the SBA as the size standard for certain industries

-Maximum loan amount up to $10 million

-Loan forgiveness if proceeds used for payroll costs and other designated business operating expenses in the 8 weeks following the date of loan origination (due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs)

-All loans under this program will have the following identical features:

-Interest rate of 0.5%

-Maturity of 2 years

-First payment deferred for six months

-100% guarantee by SBA

-No collateral

-No personal guarantees

-No borrower or lender fees payable to SBA

SBA’s announcement comes on the heels of a series of steps taken by the Agency since the President’s Emergency Declaration to expeditiously provide capital to financially distressed businesses affected by the Coronavirus pandemic. Since March 17, SBA has:

-Declared all states and territories eligible for Economic Injury Disaster Loan assistance

-1-year deferment on Economic Injury Disaster Loans provided due to COVID-19

-Automatic deferment of previous disaster loans for homeowners and businesses through 2020

-Waiver of garnishments through 2020

For more information, visit www.SBA.gov/Coronavirus.

For more information on SBA’s assistance to small businesses, visit www.SBA.gov.