How to Access Relief Package That Includes $349 Billion in Loans for Small Businesses
Good news to report for small businesses. The US Congress stepped up and passed the $2 trillion stimulus package aimed at stemming the economic fallout caused by the coronavirus pandemic. President Trump signed it into law moments after it cleared the House of Representatives on Friday.
We’re here to break down exactly how small businesses can leverage the monetary relief provided in this unprecedented aid package.
While the stimulus package is not earmarking specific funds to the wellness industry, it does unlock $349 billion in loans for small businesses. Among the program’s best features–funds used to cover payroll expenses, rent, interest on mortgage obligations, and utilities will count as grants and will not have to be paid back. This is a crucial lifeline for millions of small businesses that have been impacted by social distancing and shelter-in-place orders.
Who is eligible for the loans?
Businesses and non-profits with fewer than 500 employees are eligible, provided they satisfy certain criteria, specifically being opened as of February 15, 2020 and paid employee salaries and payroll taxes or issued payments to independent contractors.
How do you apply?
The Small Business Administration guarantees the loans, but borrowers need to apply through banks, credit unions, or other lenders. The type of note is called a 7(a) loan, and there are approximately 1,800 private lenders approved to issue these loans to small businesses. The best way to begin is to reach out to your current lender or bank and ask about applying for a 7(a) small business loan. Remember, the main underwriting standard will be showing proof of payroll costs, so gather your paperwork now so it’s ready to go when you apply.
How long will it take to get the money?
This is still being ironed out, but the goal is for the loan to be approved and funds made available the same day.
How much money can you borrow and what kind of interest rate can you expect?
The maximum amount that businesses can borrow will be based on past payroll expenses. Once you meet with your lender(s), they will be able to break it down for you. That said, the legislation temporarily lifts the maximum loan amount to $10 million from $5 million. The maximum interest rate for these loans is set at 4% with the added bonus of allowing borrowers to defer payments for six months to a year. It would be wise to shop several lenders to lock in the lowest interest rate possible.
Where can you find additional information?
Contact lenders for additional information, or reach out to the Small Business Administration at SBA.gov.
This information contained herein does not constitute medical, financial, legal, or other professional advice and is meant to be used solely for informational purposes. It does not take into account your specific circumstances and should be not acted on without full understanding of your current situation, future goals and/or objectives by a qualified professional. Mindbody assumes no liability for actions taken in reliance upon the information contained herein.