On March 27th, 2020, the House will vote on a $2 trillion emergency relief bill to financially support households and businesses affected by the coronavirus pandemic. The House is expected to vote on the bill to approve by Friday. The bill will then go to the President for signature.
Help for small businesses
The bill would give small businesses access to a nearly $350 billion loan program through the SBA 7(a) program to cover monthly expenses like payroll, rent, and utilities. Loans under the “Paycheck Protection Program” may not have to be repaid if businesses maintain their workforce and use the loan proceeds as designated.
Once this bill is signed the SBA will have up to 30 days to submit final guidelines for the program though they may have guidelines sooner. Key elements of the Paycheck Protection Program in the bill are expected to be:
- 100% government guarantee (business must maintain payroll) thru 12/31/2020
- If the borrower uses the funds as designated, they won’t have to pay back that portion of the loan
- Loan sizes up to $10MM
- 4% maximum interest rate
- Loan size based on formula: 2.5 times monthly average for payroll during the previous 1-year period (though high wage earners will be capped).
- Loan proceeds may be used for payroll, mortgage payments, rent payments and payments on any debt obligations
- No guarantee or collateral required
- No prepayment penalty
Once the SBA guidelines are released, more details on the program will be available.