JohnKim Financial

SBA Coronavirus Relief Loan Update as of March 24, 2020

—

by

John Kim
in ,

The Congressional Small Business Task Force unveiled a $300B Emergency Coronavirus Relief Package as part of the Keeping Workers Paid and Employed Act, Division A of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and US Congress is negotiating to pass this bill as of now. This includes:

  •  $300 billion in lending authority for SBA 7(a) loans
  • Borrowers can get this SBA 7(a) loan OR an EIDL (direct SBA disaster loan), but not both
  • 100% government-guarantees on these SBA relief loans made through 12/31/20
  • Loan sizes of up to $10MM, calculated by taking the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the one-year period before the date on which the loan is made (except for applicants with seasonal employees, in which the payroll is based on the average total monthly payments for payroll from 3/1/19 through 6/30/19)
  • Loan proceeds are only for payroll support including medical leave, costs related to health benefits, employee salaries, mortgage payments, rent, utilities, and any other debt payments incurred before the covered period. (These relief loans are not eligible for business acquisitions, real estate purchases, or other typical 7a loan proceeds)
  • Available for currently eligible SBA borrowers AND not-for-profits
  • Delegated (underwriting) authority will be made for SBA participating lenders to expedite loan processing
  • Borrower and lender guarantee fees will be waived
  • Provides a “process” (TBD) by which borrowers will be eligible for loan forgiveness in an amount equal to their payroll cost and costs related to debt obligations for the period between 3/1/20 and 6/30/20. The amount of forgiveness will be reduced proportionally by the number of employees laid off during this time, and it will also exclude employees making in excess of $100k from this “forgiveness” calculation
  • Lenders must verify payroll costs
     

We will keep posting new updates as US Congress passes the CARES Act and SBA issues new lending guideline to its lending partners. In the mean time, you can inquire us via johnkimfinancial@gmail.com or contact us.