State & Federal Programs/Opportunities
Effective March 19, 2020, Colorado has been declared an eligible disaster zone. The U.S. Small Business Administration (SBA) is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). All 64 Colorado counties have been advanced by Governor Jared Polis for inclusion in the U.S. Small Business Administration Economic Injury Disaster Loan Program.
Here are the current details for the COVID-19 Stimulus Bill that recently passed in the U.S. Senate yesterday, is expected to pass in the U.S. House tomorrow morning, and be signed into law by the President shortly thereafter:
• A $350 billion forgivable loan program designed to ensure that small businesses do not lay off employees.
• A 50% refundable payroll tax credit on worker wages will further incentivize businesses, including ones with fewer than 500 employees, to retain workers.
• Looser net operating loss rules that will allow businesses to offset more.
• A delay in employer-side payroll taxes for Social Security until 2021 and 2022.
• Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides.
• A portion of the $425 billion in funds appropriated for the Federal Reserve’s credit facilities will target small businesses.
How does the $350 Billion small business loan program work?
The Small Business Administration, under the stimulus package, will oversee the Paycheck Protection Program, which will distribute $350 billion to small businesses that can be partially forgiven if the companies meet certain requirements. The loans will be available to companies with 500 or fewer employees. The SBA loans aim to create a balance between loans on favorable terms and grants by providing forgiveness to firms that use loaned funds for payroll, rent, mortgage interest, and utility payments.
Loans will be administered by banks and other lenders, and businesses can receive loans up to $10 million, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate of up to 4%. The bill provides for an expedited origination process.
If the business uses the loan funds for the approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the principal of the loan will be forgiven, meaning the company will only need to pay back the interest accrued.
How can Full Velocity can help your business navigate the SBA application process:
Complete application process online using the Electronic Loan Application via the SBA’s secure website at https://disasterloan.sba.gov/ela. Paper loan applications can be downloaded from https://www.sba.gov/disaster