The Coronavirus Aid Relief and Economic Security Act (CARES Act) and Small Business Loans

On March 27, 2020, as a result of the Corovavirus Pandemic, the CARES Act was signed into law. While the CARES Act provides many benefits to individuals, the Act also provides many benefits to small businesses that are suffering during this COVID-19 Pandemic. The small business loans are to ensure that businesses have funds in order to pay their employees, mortgages, rent and utilities.

Under the CARES Act, Small Business Loans are being issued by the Small Business Administration (“SBA”) and several restrictions that are typically in placed have been lifted, so that many more businesses can apply for the loans or grants. Once grant being offered is the EDIL grant in which business can make a request for an advance of $10,000 prior to being approved for the loans. In addition, the initial $10,000 will be forgiven and businesses will not have to repay this amount, even if they are not approved for the rest of the grant. These funds are being issued on an emergency basis and are also available to sole proprietors.

Businesses can request these small business loans here https://covid19relief.sba.gov/#/.

In addition, the SBA will be offering small businesses other business loans called paycheck protection plan. This loan plan allows small businesses to request loans to pay their employees, utilities, mortgages, rent and other debt liabilities. The amount will be based upon a calculation computed by SBA based upon payroll expenses, but not to exceed $10,000,000. The interest rate is not supposed to exceed 4 percent (4%), will have payments deferred for a minimum of 6 months and not exceeding 1 year with repayment over a 10 year period. Finally, if these loans are used for the intended purposes and the applicant can request that the loan be forgiven. The entire amount can be forgiven, but the amount of forgiveness will be reduced based upon factors relating to numbers of employees terminated during a certain period and if salaries of employees have been reduced.

If you are concerned about your business or a small business loan in Maryland, and Washington DC, allow Robb Longman and the business attorneys at Longman & Van Grack to guide you through these issues. You can reach Mr. Longman and Longman & Van Grack at (301) 291-5027 for a phone consultation today.