By now, you are aware that Congress recently passed the $2 Trillion CARES Act to aid individuals and companies during this time of uncertainty and struggle. As part of the legislation, $349 billion of loan guarantees have been dedicated to supporting small businesses. Here are some key facts from the SBA*:
- The part of the CARES Act that supports small businesses, The Paycheck Protection Program, provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities
- Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees
- Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease
- Small businesses with 500 or fewer employees – including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors – are eligible. Businesses with more than 500 employees are eligible in certain industries
- As of April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. We encourage you to apply as quickly as you can because there is a funding cap. You can find the application here
- A list of participating lenders as well as additional information and full terms can be found at www.sba.gov. All loans will have the same terms regardless of lender or borrower
The Role of Dedicated Equipment and Technology Financing
SBA banks will get PPP emergency capital moving, but there is no way they could have prepared for the flood of demand now at their door or that the execution details of the program are emerging after its launch. Your working capital lenders have their hands full – and rightly so. A dedicated equipment and technology lender can help you with the supplemental financing to handle the rapid adaption to the current business environment while preserving cash, protecting cash flow, and leaving your working capital relationship undisturbed.
We’re all in this together.
In the coming days, LEAF will offer updates and key information to help you get through this environment and ultimately move forward. And as you evaluate lending needs to complement your access to these government-sponsored programs, LEAF can assist with easy access to flexible equipment and technology financing.
*Information on the CARES Act and PPP are sourced from:
All references to the SBA, CARES Act, Paycheck Protection Program, and all details therein are based on market communications as of the date of this post. The above is for informational purposes only. Please consult tax and accounting professionals for advice regarding federal, state, and local programs that may apply to your situation. For more information on SBA loan programs, go to www.sba.gov. LEAF is not an SBA Lender. All details and processes around any SBA program should be confirmed with SBA and/or an SBA approved lender. All details related to the SBA programs identified above are subject to change without notice. LEAF finances equipment only for business purposes and not for personal, family, or household use. All applications are subject to credit approval.