Temporary Changes to the Business Loan Program and Paycheck Protection Program
Small businesses have been adversely affected since the COVID-19 outbreak, notably due to forced government closings and lack of economic stimulation during this time. Following President Trump’s Emergency Declaration on March 13, 2020, many small businesses shut their doors in an effort to stop the spread of COVID-19. Since then, the Trump Administration has attempted to establish relief for individuals and small businesses. On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act provides emergency assistance and health care response to individuals and businesses affected by this pandemic. Under the CARES Act, the Small Business Administration is authorized to modify existing loan programs and establish new programs to aid small businesses impacted by COVID-19. The Paycheck Protection Program is one such loan program.
The Paycheck Protection Program was created with the intent to provide quick relief to small businesses and dispenses with the 30-day delayed effective date. Importantly, 100% of the business loans made of Section 7(a) of the Act will be guaranteed. Section 7(a) loans are loans issued by the SBA to small businesses that need financial assistance. Loan applications can only be made through June 30, 2020, and will cease to provide loans once the allocated funds have been exhausted.
While financial assistance has been available by the SBA before, the Paycheck Protection Program provides loans to ensure qualified applicants can make payroll payments, utility payments, and rental payments during such unparalleled times. Small businesses must understand the terms and conditions so that their prompt and accurate applications can be submitted, and the loan proceeds utilized in conformity with the law.