Paycheck Protection Program FAQs For Small Businesses
Apr 02 2020
"All applications or recommendations for Michigan Small Business Relief Program loans will be referred from The Enterprise Group to the MEDC for evaluation and disbursement", the release said. "You don't know how long it's going to take for them to recover".
The program largely puts the lenders into an administrative role, processing and verifying applications and disbursing funds, while foregoing their normal loan underwriting and SBA documentation processes.
Eligible businesses include non-profits, veterans organizations, tribal concerns, sole proprietorships, self-employed individuals and independent contractors with 500 or fewer employees, or ones that are no greater than the number of employees set by the SBA as the size standard for certain industries. You can call your local Small Business Development Center or Women's Business Center and they will provide free assistance and guide you to lenders.
Loan interest rates are capped at 4% and borrower and lender fees are waived.
As the SBA explains it, "the Paycheck Protection Program is created to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses..."
The Corporate Finance Network represents accountants serving more than 12,000 small and medium-sized businesses nationwidw, who say that despite all the government support, 98 per cent of their clients either possibly or definitely won't get the cash they need to survive for four months.
"If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven", reads the SBA guidelines.
"Applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans", she added.
If you apply for an EIDL and the grant, you can still apply for a Paycheck Protection loan.
The Baton Rouge Area Chamber is encouraging all businesses to fill out the application now, in preparation for submission to an SBA-approved lender starting April 3. They're for firms with up to 500 employees, with a $100,000 annualized cap on each employees' salary.
Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). The maximum loan amount is $10 million.
Nine banks have made the cut to participate in the government-backed $6.25 billion loan scheme to help businesses hit by the coronavirus crisis and subsequent national lockdown. Remember, the goal is employee retention at or at near full compensation.
The relief package covers six months of principal and interest on new 7 (a) loans issued before September 27, 2020. The SBA guaranteed $23.7 billion in loans during fiscal 2019, which ended September 30.
However, this tax credit plan is not available to employers receiving assistance through the Paycheck Protection Program. "So this was a way to be able to do it to get those dollars directly to those small businesses".