DISCLAIMER: THE FOLLOWING INFORMATION IS NOT LEGAL ADVICE. THIS IS GENERAL INFORMATION AND DEFINITIONS VARY FROM STATE TO STATE. PLEASE CHECK WITH A LOCAL ATTORNEY OR CONTACT THE IRS WITH ANY QUESTIONS.
***Updated again on 4/5/2020***
Question submitted to the SBA regarding the calculations of PPP:
After the horrendous roll out of the PPP program below, the government is trying to keep it together. Businesses requested billions of dollars of the PPP loans, but many were shut out. It seems the bank cherry picked the customers. Here I am adding additional resources:
Bank of America has now gone live with their PPP program:
Our country is going through some of the most challenging times in its history due to the Coronavirus. Instead of writing yet another explanation of what the stimulus package is or does, I am creating a list of the resources and articles already written by others. By now I am sure everyone has heard of the $2 Trillion stimulus package. This resources is meant specifically for small businesses and not for individuals. (However, here is a link to an explanation of resources for individuals.) So what are the options for small businesses?
US Chamber, Goldman Sachs, Skadden and Forbes have written some great pieces to breakdown what the stimulus package for small businesses is and what it is not. I will breakdown into a roadmap what different resources are available for small businesses. I highly encourage you all to read the pieces as these companies have spent a lot of time, money and energy into writing these guides.
Goldman Sachs and Skadden have done a thorough in depth analysis of the stimulus package. They have written in great detail of what resources are available for small businesses. They talk about the SBA loans, the forgivable ones and the ones you have to pay back. I highly recommend that you read these 2 resources and get a summary of what the stimulus package can do for you.
If you have read the above pieces and I hope you have. You will see that they discussed 7(b) loans. Below there are 2 separate links from the SBA that seem to be for similar types of loans. One is specific to disaster relief and one is specific to Covid Disaster Relief. To be honest, I don’t know what you should choose. What I do know is I called the SBA and they also did not really have an answer for me. 7(b) loans are NOT FORGIVABLE and you will need to pay these loans back. Nonetheless, there is an option for a $10,000 advance in the Covid link. Again, I don’t know really know the difference and was not able to get any clarity from the SBA.
As of March 31, 2020 at 9am the 7(a) loans were not available on the SBA website for Covid specific relief, just the regular 7(a) loan application. Just an FYI, stay tuned and check the SBA website daily.
US Chamber has a really nice breakdown titled “Coronavius Emergency Loans – Small Business Guide and Check list.” This PDF focuses mainly on the PPP loans or Paycheck Protection Program. If you read the pieces above these are the 7(a) loans they were talking about. These are the loans that you are hearing about that CAN BE FORGIVEN. Yes that is right, you may take these loans and later have them forgiven by the government. Forgiven means you do not have to pay them back if you follow their specific criteria.
A more in depth explanation about the PPP by Peter J. Reilly here and is 100% worth a read. Everything here is worth a read of course, but he really does a great job of explaining the way the PPP will work. Who doesn’t want free money in these times?