The Small Business Administration and the Treasury Department are mobilizing banks to get $349 billion in capital to small businesses as part of the national stimulus program. The SBA will accept loan requests starting April 3.
The Paycheck Protection Program, established by the CARES Act, will provide relief to small businesses with loans up to $10 million. The first eight weeks of proceeds that go to payroll and other business operating expenses, including rent, utilities and mortgage interest, will be completely forgiven. The PPP loans’ first payments will be deferred for six months, and will be made for two years at a 0.5 percent interest rate.
The program will be available retroactive from Feb. 15, so employers can rehire their recently laid-off employees through June 30.
“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly,” SBA Administrator Jovita Carranza said. “Our goal is to position lenders as the single point-of-contact for small businesses –– the application, loan processing and disbursement of funds will all be administered at the community level.”
All banks are eligible to make PPP loans, though existing SBA-certified lenders will have delegated authority. Others must be approved before making loans by submitting an application to the SBA.
“Treasury and the Small Business Administration expect to have this program up and running by April 3 so that businesses can go to a participating SBA (7)a lender, bank, or credit union, apply for a loan, and be approved on the same day,” said Steven Mnuchin, treasury secretary. The loans will provide capital without collateral requirements, personal guarantees, or SBA fees.
“We remain committed to supporting our nation’s more than 30 million small businesses and their employees, so that they can continue to be the fuel for our nation’s economic engine,” Carranza said.