SBA Provides Small Business Guidance
The U.S. Small Business Administration has issued initial guidance regarding the Paycheck Protection Program (the “PPP”), a keystone of the legislative response to the Coronavirus (COVID-19) pandemic. The PPP provides loans designed to provide a direct incentive for small businesses to keep their workers on the payroll.
The SBA will forgive PPP loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
The SBA has announced details of the PPP:
- While the new law allows for loan forgiveness if the funds are used for payroll costs, interest on mortgages, rent, and utilities, the SBA anticipates that 75% of the forgiven amount will have to have been used for payroll.
- PPP loans will have a maturity of 2 years and an interest rate of .5%.
- Lenders may begin processing loan applications as soon as April 3, 2020.
- Applications can be made through an existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating in the PPP program.
- To begin preparing a PPP loan application, download a sample form to see the information that will be requested by lenders.
The SBA offers other pandemic related assistance. Small business owners are currently eligible to apply for disaster assistance or Enhanced Debt Relief is also available in SBA’s other business loan programs to help small businesses overcome the challenges created by this health crisis.
NJEDA offers Small Business Assistance
The New Jersey Economic Development Administration (NJEDA) has also announced several small business assistance programs, including:
- Small Business Emergency Assistance Grant Program – provides operating expense grants of up to $5,000 to small businesses with 1-10 full-time equivalent employees in highly impacted industries (retail; accommodation and food service; arts, entertainment and recreation; repair and maintenance; personal & laundry services and business with eligible NAICS codes that start with 44, 45, 71, 72, 811, 812.
The grant application window opens April 3rd at 9:00am ET and will close no later than April 10 at 9:00am ET. Applications will be available at https://cv.business.nj.gov.
- Small Business Emergency Assistance Loan Program – provides Up to $100K working capital loans for up to 10 years for New Jersey businesses with $5 million or less in revenue; interest at 0% for years 1-5; 1-3% for years 6-10.
- Emergency Assistance Guarantee – provides a $100,000 Maximum guarantee, 50% guarantee of working capital loans, take first loss position; no fees. Applicants must work through a Premier Lender bank or a Premier Community Development Financial Institution (CDFI).