The stimulus package includes roughly $350 billion in federally-backed loans for small business owners, some of which borrowers will not have to pay back.
The biggest provision of the CARES Act, the $2 trillion in economic relief package signed last week, is roughly $350 billion for small business loans. The loans are federally guaranteed, no interest, and tax-free. Additionally, all loan payments are deferred for one year, with some portion forgiven -- meaning it does not have to be paid back.
One of the key programs in the package is the Paycheck Protection Program, designed to help businesses keep their employees on payroll by providing each business a loan up to $10 million. If all the employees are kept on payroll for eight weeks, the SBA will forgive the portion of the loan used for payroll, rent, or utilities. And important to note is that up to 100% of the loan is forgivable.
Though normal processing for SBA loans can take months, the package calls on the Small Business Administration to expedite the loan process, loosening some rules normally governing SBA loans, like not requiring borrowers to provide collateral or personal guarantees.
For more information, go to the Coronavirus Small Business Guidance & Loan Resources website.