Financial Assistance from the US SBA for Small Businesses and Non-Profits (SBA file date: April 3 ver 1)
Summary
An SBA Houston District Office slide deck explains the relief that the CARES Act, signed Friday, March 27, 2020, made available to small businesses and nonprofits. It presents two loan choices: Economic Injury Disaster Loans of up to $2 million made directly by the SBA at 3.75% for small businesses and 2.75% for private nonprofits, with terms up to 30 years and an advance of up to $10,000 that need not be repaid; and Paycheck Protection Program loans from existing lenders at 1% over 2 years, with at least 75% of the forgiven amount required to go to payroll. Lenders could begin processing PPP applications as soon as April 3, 2020. Borrowers on 7(a) loans in regular servicing are relieved of six months of principal, interest and fees, and a fraud advisory warns against anyone demanding payment up front for loan approval.
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U.S. Small Business
Administration
Agenda
1. Non-Monetary Assistance
from the US SBA and our Partners
2. Financial Assistance from the US SBA
for Small Businesses and Non-Profits
3. Additional Resources
These Slides are available to download at:
www.sba.gov/tx/houston
Non-Monetary Assistance
Important Non-Monetary Assistance from SBA
SBA has three local Resource Partners
• Texas Gulf Coast Small Business Development Centers (SBDC)
• SCORE Mentors
• The WBEA Women’s Business Center (WBC)
A range of help during the downturn, to include:
• Cash flow management / short term financial management
• Messaging / Social Media to stay engaged with customers
• Import/Export
• Supply Chain
• Strategic Planning and Financial Tune-Up; prepare to prosper after the disaster
• Planning for further disasters / Risk management / Insurance counseling
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Contact Information
Small Business Development Center Houston SCORE
713-752-8444 713-487-6565
www.sbdc.uh.edu www.houston.score.org
Women’s Business Center U.S. Small Business Administration
713-681-9232 713-773-6500
www.wbea-texas.org/womens-
business-center SIGN-UP FOR EMAIL UPDATES:
www.sba.gov/tx/houston
FOLLOW US ON TWITTER:
@SBA_Houston
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Financial Assistance
From the US SBA
The CARES Act
• Signed into law Friday, March 27, 2020
• SBA policy regarding the CARES Act issued late April 2
• You should read the Act
• We can not offer legal interpretation of the Act
• We can not comment on portions of the Act unrelated to US SBA
• The complete CARES Act is located here:
• https://www.congress.gov/bill/116th-congress/house-bill/748/text
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The CARES Act
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Forbearance of Your Existing SBA Loan
Existing
Micro Loans 504 Loans
Disaster Loans
• SBA will defer existing
• For micro loans, up to six loan payments through
(6) consecutive months • Up to six (6) consecutive December 31, 2020
• Deferment may not cause months or 20% of the automatically.
the loan to extend beyond original loan amount, • Borrowers of home and
the maximum six (6) year whichever is less business disaster loans do
maturity not have to contact SBA
to request deferment.
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Important Item In CARES Act – 7(a) Loans
• Under the CARES Act, 7(a) Borrowers are relieved of any obligation to pay the
principal, interest and any associated fees that are owed on a 7(a) loan in a
regular servicing status (including Community Advantage loans) for a 6-month
period beginning with the first payment due on a loan after March 27, 2020.
• SBA will pay this first loan payment to the Lenders within 30 days of the first
loan payment due date after March 27, 2020.
• If a Lender receives a loan payment from a Borrower after March 27, 2020, the
Lender must inform the Borrower that it has the option of:
• the Lender either returning the loan payment to the Borrower or
• applying the loan payment to further reduce the loan balance after application of SBA’s
payment
• To make the first payment, SBA will need Lenders to provide the gross monthly
loan amount due (that includes both the guaranteed and non-guaranteed
portions of the loan) as soon as possible.
• SBA will provide further guidance to Lenders soon.
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Passage of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act
Gives Businesses TWO Loan Choices
Affected, Eligible
Business?
1 2
Paycheck Economic Injury
Protection Disaster Loan
Program (PPP) (EIDL)
Loan is from Loan is directly
existing SBA from the federal
Lender government (SBA)
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EIDL Loans
Economic Injury Disaster Loans (EIDL)
Loans up to $2 million; no payments for 12 months
3.75% interest rate for small businesses; 2.75% for private non-profits.
Long-term repayments up to 30 years
Small businesses, Small Ag cooperatives, and private non-profits are eligible
May be used for fixed debts, payroll, accounts payable and other bills affected by the disaster
May be approved solely on the applicant credit score.
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Additional EIDL Details
No cost to apply; No obligation to take the loan (if offered)
Amount is determined by SBA from your information
Existing SBA Disaster or Business loans do not make you ineligible
Personal guarantee requirements:
• None if loan is under $200,000
• If over $200,000 then guarantee from all 20% or greater owners
Collateral:
• If over $25,000 EIDLs require collateral
• SBA will not decline for lack of collateral, but requires the pledge of what is available
• Does not require primary residence in Texas
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CARES Act - EIDL Grant
• Until Dec 31, 2020 affected small businesses may request
• Up to $10,000
• Eligibility determined by self-certification
• Payment should occur within 3 days
• Repayment is not required even if subsequently denied a loan
• Advance may be used for any purpose described in section 7(b)(2) of the
Small Business Act (15 U.S.C. 636(b)(2)), including:
• paid employee sick leave if unable to work due to the direct effect of the COVID–19
• payroll to retain employees
• increased costs to obtain materials unavailable due to interrupted supply chains
• rent or mortgage payments
• obligations that cannot be met due to revenue losses
NOTE: An applicant may receive an EIDL Loan and a PPP loan as long as the
costs being paid with each are different (no "double-dipping").
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How to Apply for EIDL
• For the COVID-19 disaster everything is online
• Works on iPhone with Safari / Chrome on Android
• If PC; works best with Internet Explorer or Microsoft Edge
• The website for applying for EIDL is www.sba.gov/disaster
• You may also contact the SBA disaster customer service center:
• 1-800-659-2955
• e-mail disastercustomerservice@sba.gov
• TTY: 1-800-877-8339
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Business Information (1 of 2)
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Business Information (2 of 2)
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Owner Information
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Additional Information (1 of 2)
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Additional Information (2 of 2)
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After Applying
Loan Processing Decision
• Information verified; credit checked; you may be asked for more info
• EIDL amount is determined
• A loan officer contacts you; makes recommendations
• Decision normally takes up to 4 weeks
Loan Closes and Funds Disbursed
• Sign and Submit Loan Documents
• Initial disbursement of $25K (this doesn’t include the up to $10K Advance) within 5 days
• Case Manager assigned that will help you with the rest
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Important Final Notes About EIDL Applications
• If more funds are needed you can submit supporting documents and
request an increase
• If less funds are needed you can request a reduction
• If denied:
• you get six months to provide a written reconsideration request with
new / supplemental information
• If denied a second time, you get an additional 30 days to appeal
• Please complete and submit everything required
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PPP Loans
Payroll Protection Program (PPP)
• Intended to help small businesses with payroll and other operating
expenses.
• SBA will forgive the portion of the loan proceeds used to cover:
• The first eight weeks of payroll costs
• Rent
• Utilities
• Mortgage interest
• More details here:
• https://www.sba.gov/funding-programs/loans/paycheck-protection-
program-ppp
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PPP Eligibility
• Small business affected by COVID-19 with less than 500 employees,
including
• sole proprietorships, independent contractors, self-employed persons
• private non-profit organization
• 501(c)(19) veteran organizations
• Certain businesses may have more than 500 employees if they meet
SBA’s size standards for those industries
• Hospitality and food industry businesses with more than one
location:
• could be eligible at the store and location level if store employs less than
500 workers
• This means each store location could be eligible
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Loan Details & Forgiveness
• Details:
• Maturity of 2 years; interest rate of 1%
• Payments deferred for six months
• No collateral or personal guarantees required
• The Government nor lenders will charge small businesses any fees
• Forgiveness is:
• Based on employer maintaining or quickly rehiring employees and
maintaining salary levels
• Reduced if full-time headcount declines or if salaries and wages decrease
• Fully forgiven if the funds are used for payroll costs, interest on mortgages,
rent, and utilities
• At least 75% of the forgiven amount must have been used for payroll
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How to Apply for PPP
• Apply through existing SBA 7(a) lenders – Apx 200 in
the Houston District
• Or any federally insured depository institution, federally
insured credit union, and Farm Credit System institution
that is participating
• Other regulated lenders will be available to make these
loans once they are approved and enrolled
• Consult with your local lender as to whether it is
participating
• Lenders may begin processing applications as soon
as April 3, 2020
• List of SBA Lenders is at www.sba.gov/tx/houston
under “corona virus”
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Sample PPP Application (1 of 5)
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Sample PPP Application (2 of 5)
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Sample PPP Application (3 of 5)
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Sample PPP Application (4 of 5)
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Sample PPP Application (4 of 5)
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Non-SBA Additional Info
Additional Info / Resources
• See your existing bank – they may have programs for you:
• We have heard about:
• JP Morgan Chase and Regions Bank programs
• PeopleFund and LiftFund Programs
• Texas Restaurant Association Grant Program
• Galveston EDA Short-term Loan Program: https://bit.ly/2UrL001
• Non-Profit Organization Assistance
• More coming…
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Contact Information
Small Business Development Center Houston SCORE
713-752-8444 713-487-6565
www.sbdc.uh.edu www.houston.score.org
Women’s Business Center U.S. Small Business Administration
713-681-9232 713-773-6500
www.wbea-texas.org/womens-
business-center SIGN-UP FOR EMAIL UPDATES:
www.sba.gov/tx/houston
FOLLOW US ON TWITTER:
@SBA_Houston
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Small Business Scam & Fraud Scheme Advisory
• The presence of an SBA logo on a webpage does not guaranty the
information is from the SBA
• If someone contacts you promising to get approval of an SBA loan,
but requires any payment up front, suspect fraud
• After you apply:
• Verify all correspondence you receive; that the application number is the
same as your actual application number
• Any email communication from SBA will end with gov.
• SBA limits the fees a broker can charge a borrower.
• Report any suspected fraud to OIG’s Hotline at 800-767-0385 or
online at, https://bit.ly/2UxdAhL
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Most Common Questions
Common Questions (1/2)
• Visit www.sba.gov/tx/houston, under Coronavirus resources:
• For a copy of this slide deck
• For the Houston District SBA lender list
• What banks are offering PPP loans?
• PPP is brand new. Lenders are coming up to speed quickly.
• Can I check status of my application online?
• YES, website to be updated soon. Until then email or phone disaster customer
service 1-800-659-2955- available 24/7.
• The Houston District office is unable to check status.
• Are EIDL loans forgiven?
• NO, but the Advance is a grant (is forgiven)
Common Questions (2/2)
• Can I apply for both EIDL and PPP?
• YES; however, you cannot duplicate benefits received.
• Which loan should I apply for EIDL or PPP?
• Each business is different. Our network of local, free resources can help.
• I have already submitted my EIDL application can I submit for the
PPP loan?
• YES, just don’t duplicate benefits included in the EIDL.
• I have already submitted my EIDL application but didn’t get the
Advance?
• Submit the new application even if you previously submitted an EIDL
application. Applying for the Advance will not impact the status or slow
your existing application.
For questions about your specific situation
• For the EIDL Loan; SBA Disaster Customer Service:
• 1-800-659-2955 -- TTY: 1-800-877-8339
• e-mail disastercustomerservice@sba.gov
• For the PPP Loan:
• Contact the SBA lender of your choice
• Lender list at www.sba.gov/tx/Houston under Coronavirus Resources
• One of our Resource Partners for general guidance:
• Texas Gulf Coast SBDC 713-752-8444 www.sbdc.uh.edu
• Houston SCORE 713-487-6565 www.houston.score.org
• Women’s Business Center 713-681-9232 www.wbea-texas.org/womens-business-center
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