Status: President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law on March 27, 2020.
Basic Overview: The SBA 7(a) CARES Paycheck Protection Program loans are a proposed expansion of the existing SBA 7(a) Standard Loan program. There are five primary differences between a SBA 7(a) Standard Loan and the SBA 7(a) CARES Paycheck Protection Program loans:
- Loan Amount Increase: Maximum loan amounts are increased from the standard $5 Million to $10 million ($2 million for a second draw)
- Expansion of Allowable Uses: The use of funds acquired through a SBA 7(a) CARES Paycheck Protection Program loan can be used to cover payroll cost, rent payments or mortgage interest, and utility payments.
- Principal Forgiveness: Of all existing SBA loan options available, the 7(a) CARES Paycheck Protection Program Loans are the only ones that provide an option for 100% principal forgiveness when specific requirements are met. Meaning these loans may be available at close to no cost to some businesses.
- Deferred Payments: All payments on SBA 7(a) CARES Relief Loans will be deferred for 6 months. However, interest will continue to accrue over this period.
- Loosened Risk Requirements: the 7(a) Cares Paycheck Protection Program loans require no personal guarantees or collateral and have no minimum FICO requirements.
Kapitus is working with SBA approved lenders to rapidly process applications for these loans as soon as they become available. For the latest updates on the program click here.