The Coronavirus Aid, Relief, and Economic Security Act includes significant provisions that affect American citizens professionally and personally.
Particularly, the CARES Act includes Paycheck Protection Program – a new loan program administered through the SBA, which provides up to $349 billion in loans to eligible entities, with such loans being subject to forgiveness under certain conditions. The hundred percent federally-guaranteed loans are available under a new subsection 36 of Section 7(a) of the Small Business Act.
Provided loans can be used for different purposes, such as:
Though the loan can’t be used for:
Eligible entities are the ones that generally have fewer than 500 employees, including the following:
Moreover, the loan can also be available to other entities in certain industries that otherwise fall under the definition of “small business concern” mentioned in the Small Business Administration Act. In some instances, those businesses can have up to 1,500 employees and still be considered a small business concern.
Loans can be provided for up to a ten-year term at 4 % interest, from 6 months and up to 1-year deferral of principal and interest payments. Loans are available with:
Loan borrowers must show that it is necessary due to the uncertainty of current economic conditions; that they are not getting duplicative funds for the same uses and that the loan will be used to maintain payroll, retain workers, or make lease, utility or mortgage payments.
The maximum loan amount is the lesser of $10 million or two-and-a-half months’ payroll (salaries, leave, insurance, taxes, etc.), calculated by the business’s average total monthly payments for payroll costs incurred during the previous one-year period.
Loan borrowers will be eligible for loan forgiveness for eight weeks commencing from the origination date of the loan of payroll costs and utility, rent or mortgage interest payments. The eligible payroll cost doesn’t include yearly compensation of more than $100,000 for individual employees.
A borrower must submit to the lender an application with the required information after which the lender will have 60 days to issue a decision.
A borrower must provide the following information:
Are you in need of Coronavirus legal help in California? Our attorneys at KAASS Law are ready and willing to provide you with the services that you need!
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