The California Guide to Coronavirus Small Business Loans

The California Guide to Coronavirus Small Business Loans

On Friday, March 27, 2020, President Trump signed the CARES Act into law. As part of the total allotment of $2.2 trillion designated for Coronavirus Aid, Relief, and Economic Security, $376 billion was designated for American workers and small businesses.

Currently, there are four temporary funding programs for businesses:

Paycheck Protection Program

Provides loan forgiveness to businesses that retain their employees. It’s a financial incentive that rewards businesses that keep their employees on their payrolls.

Details

  • Employees must be kept on the payroll for eight weeks
  • Funding must be used for payroll, rent, mortgage interest, or utilities. Likely that 75% of the funding must be used for payroll
  • Loan payments deferred for six months
  • Collateral and personal guarantees are NOT required
  • Fees will NOT be charged by the federal government or your lender
  • Employer must keep or quickly rehire their employees with same salary levels. If not, loan forgiveness amounts can decrease
  • If not forgiven, the loan maturity is 2 years and the interest rate is 1%
  • Apply with a SBA 7(a) lender or a federally-insured depository institution, federally-insured credit union, and participating Farm Credit System institution
  • Application processing may begin on April 3, 2020 and will be available through June 30, 2020

Who Can Apply

  • Small businesses that meet the SBA size standards
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans’ organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
    • 500 employees, or
    • SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Sole proprietors, independent contractors, and self-employed persons

Application Form
PPP Borrower Application PDF Form

 

EIDL Loan Advance

The Economic Injury Disaster Loan Emergency Advance Provides (EIDL) grants up to $10,000 of economic relief to businesses experiencing a “temporary loss of revenue” due to COVID-19.

Details

  • The “advance” is granted to ANY small business employing less than 500 employees
  • This loan “advance” does not need to be repaid

Who Can Apply

  • Includes sole proprietorships, independent contractors, self-employed, private non-profit organization, and 501(c)(19) veterans’ organizations
  • Businesses in certain industries with over 500 employees may also qualify if they meet the SBA’s size standards

Application Form (Online)
Covid-19 Economic Injury Disaster Loan Application

 

SBA Express Bridge Loans

This loan expands on the EIDL Loan Advance by giving small businesses quicker access to loans up to $25,000 if they have a current working relationship with an SBA Express Lender. The idea is to provide businesses with a term loan to help them weather their loss of revenue.

Details

  • Term loan amounts up to $25,000
  • Fast approvals
  • Must be repaid in full or in part by proceeds from the EIDL loan

Application Form
For now, the application form links to the EIDL Loan Application Form

 

SBA Debt Relief

Grants businesses a financial “reprieve” throughout the COVID-19 pandemic.

Details

  • The SBA commits to paying the principal, interest, and fees on loans and microloans
  • Term is for six months
  • Payments are made for current 7(a) and 504 loans. Payments can also be made for 7(a) and 504 loans issued before September 27, 2020
  • If you had a disaster loan and its status was “regular servicing” as of March 1, 2020, your payments are deferred through the end of the year (December 31, 2020)
  • Loan interest continues to accrue
  • The loan deferment does not forgive Preauthorized Debit (PAD) or recurring payments. You must cancel recurring payments if you’ve set them up. If you pay through PAD.gov, you must contact your SBA servicing office to cancel the PAD directly. Borrowers that cancelled recurring payments will need to set up the recurring payment again
  • Once the automatic deferment period ends, you must resume your principal and interest payments