Who is eligible for a small business loan through the stimulus package?
The U.S. Small Business Administration’s web site states that those eligible for the Paycheck Protection Program are businesses with fewer than 500 employees. This includes businesses that are sole proprietorships, independent contractors, self-employed individuals, private nonprofit organizations or veteran organizations that have been impacted by the COVID-19 pandemic.
How do you apply for the small business loan?
Businesses can apply for the small business loan through any existing U.S. Small Business Administration lender or through any federally insured depository institution, federally insured credit union or Farm Credit System institution. Participating lenders vary by state, so be sure to check http://www.sba.gov/partners/lenders/microloan-program/list-lenders to find the nearest bank or participating financial institution to get started.
What is the purpose of the Paycheck Protection Program?
The program is meant to stem layoffs at small businesses by providing low-interest loans to cover payroll while state and federal mandates around the coronavirus are in place.
How much money does the Paycheck Protection Program offer?
The loan program offers up to $10 million to each small business, with a $100,000 cap per employee. The loan is meant to cover up to two months of the average monthly payroll cost with an additional 25 percent for operating costs such as rent, mortgage or utilities.
Is there an interest rate for the small business loan?
The loan has a maturity of two years and an interest rate of one percent.
How does a small business qualify for loan forgiveness?
The government will forgive a loan in full if a small business used at least 75 percent of the loan amount to continue paying employees. A loan will be partially forgiven if the amount allocated to payroll is less than 75 percent.
A business will owe more on a loan, if not the full amount, received through the program if it initiates layoffs or cuts employee pay.