On Friday, March 27, Congress passed the Coronavirus Aid, Relief & Economic Security Act (CARES ACT). This $2 Trillion stimulus bill is intended to help ease some of the economic disruption caused by COVID-19 by providing loans to businesses.

The CARES Act has created a new SBA Lending Program, The Paycheck Protection Program (PPP), targeted at company’s under 500 employees. Additionally, traditional Economic Injury Disaster Loans (EIDL) are also currently available. The CARES Act also requires The Treasury Department, within 10 days of enactment, to create a loan program for companies with over 500 employees. IFDA will publish information about this program as it becomes available.

There is certain to be tremendous demand for all types of CARES ACT loans.  We suggest you get started now by reaching out to your current lending institution to determine if they are approved to issue SBA backed PPP or Disaster Loans.  If they are, call them.  If not, find an approved lender in your area who is approved by the SBA.  Congress has approved a limited amount of funds so be sure you are able to secure your share, if you require it.
 

Below you will find detailed information to help you make an informed decision should you decide to apply for a loan.


Disclaimer
****The following information and links to other information has been prepared by IFDA for the general information of IFDA member companies. It is not intended to, and does not, provide tax, legal or professional advice concerning any specific matter.  You should not act on the information without first obtaining professional advice and counsel.****
 

What options are available to you?

  • SBA Small and Mid-Size Business (Up to 500 Employees)
    • SBA Paycheck Protection Program (PPP)
    • SBA Economic Injury Disaster Loans (EIDL)
  • Large Companies (Over 500 employees)
    • Large Company Lending Program

 

Compare Loan Options

 

 

SBA Small and Mid-Size Business Lending Programs

(up to 500 employees)

Large Company Program

(over 500 employees)

Loan Program

SBA Paycheck Protection Program

SBA Disaster Loans

Large Company Lending Program      

Loan Name

Coronavirus Aid, Relief & Economic Security Act (CARES ACT): Paycheck Protection Program (PPP)
Economic Injury Disaster Loans (EIDL)
Coronavirus Aid, Relief & Economic Security Act (CARES ACT)
Employee Size
Maximum of 500 Employees. (total headcount includes full time and part time)
Maximum of 250 Employees.
Up to 10,000 employees or $2.5 billion in annual revenue.

Purpose

Provide covered loans to small businesses who were affected by economic conditions as a result of COVID-19.
To help small businesses stay afloat until the disaster ends.
Information about this program will be filled in once Treasury releases the details. 
Who can apply?
If your business was effected by the COVID-19 crisis. Borrower must make good faith certification that current economic conditions cause borrower to request support and that the loan will be used for approved uses and are not receiving duplicative funds for the same uses from another SBA program.                             
Residents of disaster areas which have been declared in all 50 states.  If you have previously taken out an EIDL related to COVID-19 you are not eligible for a loan under the CARES Act.  It does allow a borrower who has an EIDL loan unrelated to COVID-19 to apply for a PPP loan, with an option to refinance that loan into the PPP loan. The emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven under the Paycheck Protection Program.                                 
Eligible Borrowers are businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Each Eligible Borrower must be a business that is created or organized in the United States or under the laws of the United States with significant operations in and a majority of its employees based in the United States. Eligible Borrowers that participate in the Facility may not also participate in the MSNLF or the Primary Market Corporate Credit Facility. Eligible Borrowers that  participate in the Facility may not also participate in the MSNLF or the Primary Market Corporate Credit Facility.
Loan Type?
7(a) Loan Program
EIDL
Under the Facility and the Main Street New Loan Facility (“MSNLF”), a Federal Reserve Bank (“Reserve Bank”) will commit to lend to a single common special purpose vehicle (“SPV”) on a recourse basis.
Loan Availability
Immediately. SBA-certified lenders, including banks, credit unions, and other financial institutions.
Find a lender today.
40 days, subject to SBA approval. Employer does not have to accept after submitting application.
An Eligible Loan is a term loan made by an Eligible Lender(s) to an Eligible Borrower that was originated before April 8, 2020.
Is the loan guaranteed?
Yes, the SBA guarantees 100% of the PPP loan under the same 7(a) terms.
 
The SPV will purchase a 95% participation in the upsized tranche of the Eligible Loan, provided that it is upsized on or after April 8, 2020, at par value. The SPV and the Eligible Lender will share
risk in the upsized tranche on a pari passu basis. Any collateral securing an Eligible Loan, whether such collateral was pledged under the original terms of the Eligible Loan or at the time of upsizing, will secure the loan participation on a pro rata basis.
Cash Flow Access
2.5x average monthly payroll for previous 12 month period. Maximum $10 million.
Up to $2 Million.
Minimum $1 million, Maximum loan size that is the lesser of (i) $150 million, (ii) 30% of the Eligible Borrower’s existing outstanding and committed but undrawn bank debt, or (iii) an amount that, when added to the Eligible Borrower’s existing outstanding and committed but undrawn debt, does not exceed six times the Eligible Borrower’s 2019 earnings before interest, taxes, depreciation, and amortization (“EBITDA”).
Collateral Required?
No. Collateral and personal guarantee requirements are waived under this program for participation. 
Economic Injury Disaster Loans over $25,000 require collateral. The SBA takes real estate as collateral when it is available. The SBA will not decline a loan for lack of collateral but requires borrowers to pledge what is available.
 
Dates Covered
February 15, 2020 - June 30, 2020 or until funds made available for this purpose are exhausted.
 
The SPV will cease purchasing participations in Eligible Loans on September 30, 2020, unless the Board and the Treasury Department extend the Facility. The Reserve Bank will continue to fund the SPV after such date until the SPV’s underlying assets mature or are sold.
Loan Uses
Allowable uses of the loan include payroll costs; employee salaries; costs related to continuation of group health care benefits during paid sick, family or medical leave; insurance premiums; mortgage interest payments; rent; utilities; and interest on any other debt obligation incurred before February 15.
These are working capital loans that may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred.

 
 
Interest Rate
Any loan not forgiven, will maintain 1% fixed rate.
3.75% for small businesses.
 
Adjustable rate of SOFR + 2.50-4%. An Eligible Borrower will pay an Eligible Lender a fee of 100 basis points of the principal amount of the upsized tranche of the Eligible Loan at the time of upsizing
Loan Maturity terms?
A covered loan will have a maximum maturity of 2 years from the date on which a borrower applies for loan forgiveness under Sec. 1106.
SBA Emergency Injury Disaster Loans made after January 31, 2020, may be refinanced under a covered loan and included in the calculation of the maximum.
4 Years. Amortization of principal and interest deferred for one year.
Repayment Terms
Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 2 years, at a fixed rate of 0.5%.
Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan, but interest will accrue. You may payback in less than two years without penalty.
Terms of up to 30 years are available with the first payment due 12 months after funds are issued.
 
Forgiveness Terms
If the employer maintains its payroll (see forgiveness reduction section) the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent and utilities would be forgiven. Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
None. Repayment terms for 30 years.
None. Borrowers must, until September 30, 2020, maintain its employment levels as of March 24, 2020, to the extent practicable, and retain no less than 90 percent of its employees as of that date.

Forgiveness Amount

Forgiveness will equal the amount spent by the borrower during the 8-week period, beginning on the date of the origination of the loan, on payroll costs, interest payments on mortgages incurred prior to February 15, 2020. Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
None. Repayment terms for 30 years.
 

How to get forgiveness?

The borrower will submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

Click to submit for forgiveness.

No forgiveness. Loans must be repaid.
 

Forgiveness Reduction

The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation. To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period. You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.
 
 
How to get the loan?
Apply starting April 3, submit application no later than JUNE 30. (Loans are first come first serve)

The loans will be administered through the 7(a) program available through SBA lenders or any FDIC insured depository institution, federally insured credit union, and Farm Credit System institution.
Download the Loan Application
 
You will need to provide your lender with payroll documentation.
Submit an Application through the SBA websiteDue to high volume on the SBA site, it is recommended to submit your application outside of normal business hours.
 

Special Conditions (Stock)

   
Borrowers and their affiliates cannot engage in stock buybacks, unless contractually obligated, or pay dividends until the loan is no longer outstanding or one year after the date of the loan.
Special Conditions (Compensation)    
Borrowers must certify that it is a U.S.-domiciled business and its employees are predominantly located in the U.S. Prohibits recipients of any direct lending authorized by this Title from increasing the compensation of any officer or employee whose total compensation exceeds $425,000, or from offering such employees severance pay or other benefits upon termination of employment which exceeds twice the maximum total annual compensation received by that employee, until one year after the loan is no longer outstanding. Officers or employees making over $3 Million last year would also be prohibited from earning more than $3 Million plus fifty percent of the amount their compensation last year exceeded $3 Million.

Printable PDF


Visit the Treasury Department's Summary Page.

 

FAQ's

What if I already furloughed or laid workers off?
A: The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation. To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.

What if I had previous taken out an EIDL as it relates to COVID-19?
A: If you received an SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.

 

Additional Restaurant Specific Provisions

  • Businesses in the hospitality and food/restaurant industries (NAICS Code 72) with more than one physical location are also eligible at the store and location level if the store/location employs 500 or fewer employees. This means that each store location could be eligible for loans under the Program. In addition, if a franchiser is listed in the SBA’s National Franchise Directory, assistance will also extend down to the franchisee at the store or location level.
 
  • Quality Improvement Property, or QIP fix: Restaurants will be able to write off costs associated with improving facilities with this retroactive amendment to the bonus depreciation rules. Sometimes called the "retail glitch," industry groups, including the NRA, have been pushing for this correction to the 2017 Tax Act.