On Friday, March 27, the House passed a “Phase 3” economic recovery package, the Coronavirus Aid, Relief and Economic Security (CARES) Act. The Senate previously passed the CARES Act on Wednesday, March 25 by a unanimous vote of 96-0. The package includes over $2 trillion in spending and tax relief including forgivable loans to small businesses, direct payments and tax relief for individuals, tax relief for businesses, financial assistance for vulnerable industries, additional health funding and policies, and additional assistance for financial markets in response to the COVID-19 pandemic.
Yesterday, the U.S. Department of Treasury and the Small Business Administration (SBA) released the application form for businesses to apply for and obtain loans under the Paycheck Protection Program while providing additional guidance on the Paycheck Protection Program (7(a) loans). The program provides $349 billion for small business loans to cover qualified payroll costs including rent, utilities, and interest on mortgage and other debt obligations. The Guidance updates and provides information that you can use loan proceeds on payroll costs including benefits, interest on mortgage obligations incurred prior to February 15, 2020, rent, under lease agreements in force prior to February 15, 2020, and utilities, for which service began prior to February 15, 2020.
The Guidance clarifies that for loan forgiveness, it is anticipated that not more than 25 percent of the forgiven amount may be for non-payroll costs. Additionally, the CARES Act was originally unclear on how to treat employees making over $100,000. The new guidance makes it clear that you can include employees making over $100,000 but they will be capped at $100,000. To obtain a loan, a qualifying small business should submit an application through an SBA and Treasury approved bank, credit union, or nonbank lender.
When Can You Apply For The Program?
- April 3 for small businesses and sole proprietorships.
- April 10 for independent contractors and self-employed individuals.
- Click here for the application form
When Is The Deadline To Apply?
- June 30, 2020
- Although this is the deadline, the Guidance encourages businesses to apply as quickly as possible due to concerns that high demand will cause the program to reach its funding cap of $349 billion prior to that date. It also notes that time needed by lenders to process applications is another reason to apply as quickly as possible.
- Interest rate: 1% fixed rate
- Maturity: 2 years
Who Needs to Sign the Application?
- For a sole proprietorship, the sole proprietor
- For a partnership, all general partners, and all limited partners owning 20 percent or more of the equity of the firm
- For a corporation, all owners of 20 percent or more of the corporation
- For limited liability companies, all members owning 20 percent or more of the company
- Any Trustor (if the Applicant is owned by a trust)
More details from the Treasury:
For the latest updates as the RV industry navigates the ongoing health crisis, visit the RV Industry Association’s COVID-19 resource page, click here.