I was able to get an updated copy of the CARES Act and have pulled out information relevant to small business assistance.
Frankly, this will do more to help more people in the long run than the checks paid directly to individuals. This is a very big deal.
Eligibility - Basically small businesses and self employed
(i) IN GENERAL.—During the covered period, in addition to small business concerns, any business concern, nonprofit organization, veterans organization, or Tribal business concern described in section 31(b)(2)(C) shall be eligible to receive a covered loan if the business concern, nonprofit organization, veterans organization, or Tribal business concern employs
not more than the greater of—
(I) 500 employees; or
(II) if applicable, the size standard in number of employees estab
lished by the Administration for the industry in which the business concern, nonprofit organization, veterans organization, or Tribal business concern operates.
(ii) INCLUSION OF SOLE PROPRIETORS, INDEPENDENT CONTRACTORS, AND
ELIGIBLE SELF-EMPLOYED INDIVIDUALS.—
(I) IN GENERAL.—During the covered period, individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible to receive a covered loan.
(iii) BUSINESS CONCERNS WITH MORE THAN 1 PHYSICAL LOCATION.—During the covered period, any business concern that employs not more than 500 em ployees per physical location of the business concern and that is assigned a North American Industry Classification System code beginning with 72 at the time of dis bursal shall be eligible to receive a covered loan.
SBA 7(a) Loan
(a) IN GENERAL.—Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended—
· Apply through your Bank
(ii) DELEGATED AUTHORITY.—
(I) IN GENERAL.—For purposes of making covered loans for the purposes described in clause (i), a lender approved to make loans under this subsection shall be deemed to have been delegated authority by the Administrator to make and approve covered loans, subject to the provisions of this paragraph.
· Covered period right now is 2/15 thru 6/30
(iii) the term ‘covered period’ means the period beginning on February 15, 2020 and ending on June 30, 2020;
· 4% Loan/10 year term/deferred for 6 months
(ii) the covered loan shall have a maximum maturity of 10 years from the
date on which the borrower applies for loan forgiveness under that section.
(L) INTEREST RATE REQUIREMENTS.—
A covered loan shall bear an interest rate not to exceed 4 percent.
(II) require lenders under this subsection to provide complete payment deferment relief for impacted borrowers with covered loans for a period of not less than 6 months, including payment of principal, interest, and fees, and not more than 1 year.
· Loan limit is lower or $10 mil or 2.5 time 12 month payroll
Loan limit is lower of $10 mil or 2.5 times 12 month AVERAGE payroll. This means ONE month payroll times 2.5 (makes more sense too).
(c) Maximum Loan Amount.—During the covered period, with respect to any loan guaranteed under section 7(a) of the Small Business Act (15 U.S.C. 636(a)) for which an application is approved or pending approval on or after the date of enactment of this Act, the maximum loan amount shall be the lesser of—
(1) the product obtained by multiplying—
(A) the average total monthly payments by the applicant for payroll, mortgage payments, rent payments, and payments on any other debt obligations incurred during the 1 year period before the date on which the loan is made, except that, in the case of an applicant that is seasonal employer, as determined by the Administrator, the average total monthly payments for payroll shall be for the period beginning February 15, 2019 and ending June 30, 2019; by (not a typo - it is 2019 for averages)
(b) 2.5
(2) $10,000,000.
· Expenses for wages, rent, utilities, mtg interest is forgivable for 8 weeks only
SEC. 1106. LOAN FORGIVENESS.
(a) DEFINITIONS.—In this section
(3) the term ‘‘covered period’’ means the 8 week period beginning on the date of the origination of a covered loan;
(b) FORGIVENESS.—An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred and payments made during the covered period:
(1) Payroll costs.
(2) Any payment of interest on any covered mortgage obligation (which shall not include any\
prepayment of or payment of principal on a covered mortgage obligation).
(3) Any payment on any covered rent obligation.
(4) Any covered utility payment.
· Forgiveness is not taxable event..
(i) TAXABILITY.—For purposes of the Internal Revenue Code of 1986, any amount which (but for this sub-section) would be includible in gross income of the eligible
(b) shall be excluded from gross income.
· No collateral and no personal guarantee required
(i) no personal guarantee shall be required for the covered loan; and
(ii) no collateral shall be required for the covered loan.
· No recourse against principles unless funds used for unauthoerized purposes
(v)NONRECOURSE.—Notwithstanding the waiver of the personal guarantee requirement or collateral under sub-paragraph (J), the Administrator shall have no recourse against any individual hareholder, member, or partner of an eli gible recipient of a covered loan for non- payment of any covered loan, except to the extent that such shareholder, member, or partner uses the covered loan proceeds for a purpose not authorized under clause (i).
Additional notes:
· - There appears to be no requirement to keep employees beyond 8 week “covered period”
· - Banks appear to have no risk Unsure of their underwriting requirements.
· - Healthcare and interest on not real estate assets appear to be excluded form forgiveness