By   On April 1, 2020
POSTED IN CategoryCash Flow Loans

SBA Loan Options Following Enactment of the Coronavirus Aid, Relief, and Economic Securities Act (“CARES Act”)

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act (“ CARES Act ”), a $2 trillion stimulus package which includes relief for small business owners affected by the novel coronavirus (COVID-19). The new programs and initiatives are designed to provide relief for small business owners, including $350 billion for expedited individual loans up to $10 million through approved lenders, and adds to the multiple avenues of relief already available to small businesses through existing programs administered by the Small Business Administration (“ SBA ”). Given the variety and complexity of new and existing relief, there has understandably been confusion about the type and nature of the loans available to small business under the various SBA programs.
The  attached chart  provides a useful comparison of certain SBA loan programs, including the traditional “7(a)” loan program, Economic Injury Disaster Loan (“ EIDL ”) program, and the new 7(a) Paycheck Protection Program (“ PPP ”).
The PPP loans, which can be used for a variety of purposes, are likely a priority for qualifying small businesses as they may be forgivable to the extent used for certain payroll, mortgage interest, rent and utility payments. To prevent double dipping, however, applicants may not receive funds from any of the programs that would be used for the same purpose as funds received from another of the programs.
This chart is intended as a high-level description of these programs. It does not contain or constitute a legal analysis of the loan programs or the CARES Act (the full text of which numbers over 800 pages), or an assessment of their suitability for any particular client or group of clients. If you have further questions, please feel free to contact us to discuss.

 

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