The COVID- 19 outbreak has affected the global economy, especially small businesses like never before. The federal government has enacted CARES (Coronavirus Aid, Relief, and Economic Security) to help small enterprises survive the pandemic.
Here is what you need to know about CARES Act loans for small businesses:
Types of Loans
There are currently two types of loans available: Economic Injury Disaster Loans (EIDL) and Paycheck Protection Loans (PPP). EIDL offers up to $2 million, whereas PPP offers up to $10 million. You can apply for both loans, but you cannot use them for the same purpose.
Small businesses, non-profits, and veterans can qualify for the loan, irrespective of their location.
After your loan is approved, you need to track your expenses for eight weeks and document them to the lender.
They will forgive the portion of the loan used for expenses after reviewing your documents. This portion becomes a grant that you do not need to repay. The interest rate for the remaining loan is 1% for a two-year term. There is a 6-month moratorium on the first payment and no prepayment penalty.
If you have requested a $10,000 grant in EIDL, the amount will be subtracted from the forgiveness amount.
Minimum Requirements for Maximum Relief
The SBA is trying to provide support to as many small businesses across the country as possible. The SBA will be lenient even if you do not have a good credit score. Also, you don’t need a personal guaranty or property to secure a CARES ACT loan.
An initiative by the government to help small businesses, CARES ACT loans will help you survive during the pandemic. Having the right commercial coverage is another way to keep your business safe. For assistance with all your business insurance needs, contact the experts at James Page Insurance today.