The Coronavirus Aid, Relief and Economic Security (CARES) Act has passed and there’s reason for small businesses to breathe a small sigh of relief. The legislation contains multiple loan, grant and debt relief programs to help entrepreneurs stay afloat or get back up on their feet. We’ve put together this summary so that you can understand the benefits that are available to businesses.
Small Business Debt Relief Program
The CARES Act legislation includes a Small Business Debt Relief Program for SBA loans. This program pays the monthly payments (including principal, interest and fees) on existing SBA 504, 7(a), Community Advantage, and Microloans in regular servicing (current status) for 6 consecutive months beginning with any payment due on or after March 27, 2020.
This benefit applies to SBA 504, 7(a), Community Advantage and Microloans only. Please note that you may have received a loan through a program that does not qualify for debt relief, such as SmartLoan, SBA Express or Capital Access.
- SBA 504 Loans: All SBA 504 Loans that were in regular servicing (current) status will be automatically included in the SBA Payment Relief Program. Under the CARES Act, SBA will pay the principal, interest and any associated fees that are owed on a 504 loan in regular servicing status. SBA will continue to make these loan payments for the 6-month period beginning April 1, 2020. If your business bank account was/is debited during this time period by Wells Fargo, please contact us. If your loan was not in regular servicing status, you are not eligible for this program and you will need to continue to make payments.
If you requested a deferral, we will not be processing it so that you can take advantage of this benefit. If you requested a deferral and signed a letter of agreement, please contact your Pursuit loan modifications representative to discuss your options.
- SBA 7(a) and Community Advantage: Under the CARES Act, 7(a) and Community Advantage Borrowers are relieved of any obligation to pay the principal, interest and any associated fees that are owed on a 7(a) Loan in regular servicing (current) status for a 6-month period beginning with the first payment due on a loan after March 27, 2020. If you made a loan payment after March 27, 2020, Pursuit will contact you to discuss your options. You may have either the payment returned to you, or you can have the payment applied to reduce your loan balance. If you requested a deferral, we will not be processing it so that you can take advantage of this benefit. If your loan was not in regular servicing status, you are not eligible for this program and you will need to continue to make payments.
- SBA Microloan: Under the CARES Act, Microloan borrowers are relieved of any obligation to pay the principal, interest and any associated fees that are owed on a 7(a) Loan in regular servicing (current) status for a 6-month period beginning with the first payment due on a loan after March 27, 2020. We removed your loan from ACH payments, so your April payment will not be debited from your account. If you have a Microloan and another type of loan, such as a SmartLoan, this benefit only applies to your Microloan. If you requested a deferral, we will not be processing it so that you can take advantage of this benefit.
Paycheck Protection Program
The Paycheck Protection Program (PPP) is a loan program that allows businesses to borrow up to 250% of their average monthly payroll.
We are currently accepting PPP applications for businesses located in NY and NJ for up to $350,000. Due to the exceptional number of applications that we have received for the program, we cannot guarantee that your loan will be approved in the latest round of Federal funding. It is anticipated that this round will run out very quickly. If we are unable to approve your loan in this round, we will continue to process it in anticipation of another funding round. To apply for PPP through Pursuit sign-up for application access here.
About the program
- Loan amount: Up to 250% of your business’s average monthly payroll costs (calculated as an average of payroll over the last twelve months), with a maximum of $10 million
- Interest rate: Fixed rate at 1%
- Fees: None
- Term: 2 years; full deferment of principal and interest for six months
- Loan forgiveness: All or a portion of the loan may be forgiven if the business complies with rules regarding usage of the funds.
- Collateral: No collateral or personal guaranty requirements
How can I use the loan?
- Salaries, wages, payroll, independent contractors (1099), benefits, etc.
- Rent & utilities
- Interest on mortgages and other loans
- Refinance of an SBA Economic Injury Disaster Loan (EIDL) made after January 1, 2020
Will I qualify?
- Business must have less than 500 employees
- Business must have been operational on February 15, 2020
- Business must have employees which is paid salaries and payroll taxes or paid independent contractors as reported on Form 1099
- For-profit and non-profit small businesses are eligible
- Sole proprietorships, independent contractors, and other self-employed individuals are eligible
For more information
Please contact your bank to apply for PPP.
Economic Injury Disaster Loan Program
For businesses seeking funding now, this loan program was made available prior to the CARES Act. It provides loans of up to $2 million to business impacted by the virus. Full program details, eligibility and application information are available here.
Emergency Economic Injury Disaster Loan Advances (Grants)
This program provides advances of up to $10,000 for those who have applied for an SBA Economic Injury Disaster Loan. This advance may be available even if your EIDL application was declined or is still pending, and will be forgiven.
If you applied for an EIDL loan prior to March 27 and wish to apply for the advance, visit www.SBA.gov/Disaster as soon as possible to fill out a new, streamlined application. In order to qualify for the advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the advance will not impact the status or slow your existing application.
Don’t Forget Local Loan Programs
In addition to these federal programs, states and municipalities are also launching programs to support small businesses. Many of these programs are available now. Check with your local Chamber of Commerce to see what’s available in your area. You can also view a list on our main COVID-19 business resources page.
Unlike the federal program, these are smaller loan funds that will be exhausted quickly. Our advice is to apply early so that your application is at the front of the queue.