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An integral part of the unprecedented $2.2 trillion coronavirus relief package passed by Congress last week is the nearly $350 billion in loans set aside for small businesses, which have been beleaguered by the virus outbreak.
The most ambitious economic stimulus legislation in U.S. history, officially known as the CARES Act, established the Paycheck Protection Program, which is designed to get cash in the hands of struggling small businesses and incentivize them to keep staff on payroll, or re-hire workers who have already been laid off.
"This is not the fault of the American public, and we want to get all of those people paid," Treasury Secretary Steven Mnuchin told FOX Business last week. "This is a Herculean effort that people will go into banks next Friday and be able to get loans. It's going to be a very simple process."
Here are all of the details on how small business owners can apply for, and access, the Paycheck Protection Program:
Which businesses qualify for the program?
Businesses with fewer than 500 employees, nonprofits (including religious organizations) and tribal business concerns that meet the SBA’s business-size definition, as well as 501(c)(19) veteran organizations are all eligible for loans under the program. Self-employed individuals and independent contractors also qualify.
To receive the aid, businesses must have been operational by at least Feb. 15.
How do I apply for a loan?
Beginning Friday, small business owners can go to any existing Small Business Administration lender, as well as any FDIC-insured institution, credit union or financial-technology lender that has signed up for the program for relief. Approximately 1,800 banks, credit unions and other financial institutions are qualified to issue loans, according to the agency.
If your bank is not an SBA-approved lender, you should contact the SBA to find one that is.
When will the loans be available?
The loans will be made available to businesses as soon as Friday, Mnuchin told FOX Business, with a same-day evaluation system put into place. However, some have cautioned that it may take longer for businesses to receive that cash.
“We’ve been on the phone with SBA — they’ve been great — but it’s still not 100 percent clear,” how soon the money will arrive, Rodger Levenson chief executive of WSFS, told the Philadelphia Inquirer. “It will take a little time to come up with a process to handle this unprecedented volume of loans.”
How much funding can my business receive?
Companies may borrow up to 2.5 times their payroll, or up to $10 million, which can be used for payroll and other expenses, like insurance premiums, mortgages, rent or utilities. Officials have suggested that if the program runs out of money, they’ll return to Congress to ask for more.
Will the loan be forgiven?
Yes. The program includes loan forgiveness for companies that keep employees on payroll or continue paying bills.
"As long as you hire those people, your loan will be forgiven," Mnuchin said last week. "This keeps 50 percent of American workers at work."
What’s the interest rate?
Senior Administration Officials from the SBA and Treasury said that the small businesses will not be charged any fees and the maximum loan percentage they will be charged is .5%.
What time period is covered by the loan?
A senior Treasury official told FOX Business the small business loan program is retroactive through Feb. 15, meaning small businesses can go back and rehire any workers laid off after Feb. 15. It extends through June 30.