I believe we are looking at 2 different programs
SBA has always had Disaster Loan Applications, for things like Hurricanes, etc… the rate of the loan is 3.5%. For Covid-19 it seems they added a “Economic Injury Disaster Loan Advance” - which is a disaster loan, for which the first $10K is forgivable. This is the one done on-line, which is very quick.
There is a new loan program under the recently passed CARES Act, called the Payroll Protection Plan. This offers up to $10 million for small business, and is administered through banks who currently are already making SBA Loans. It is very low interest (It started at 0.5%, but I believe banks complained and it is now 1%). This allows much large forgivable amounts, up to 2.5 months of payroll and rent expenses. Can you borrow $10 million, if your company 2.5 month payroll is only $100K? NO - and that’s why SBA is having your local bank get in the middle, to handle approval and administration.
My bank, which is the largest SBA lender in this part of our state, says they are not ready to offer these lines yet - maybe Monday…..
CARES act question...
You are required to rehire employees who were laid off and go to full payroll for those who are working a shorter day, so if you are in a state that has closed all businesses and you get no business,but have taken the loan to keep your employees working, what happens after you have used all the funds and your state is still on lock-down?
I have not seen an answer to this question.