The following information is based on the text of the Senate rescue package:
Key links to Senate rescue package
The Paycheck Protection Program would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains its payroll, then the portion of the loan used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven.
· Uses existing SBA 7(a) loan program.
· Farms and ag businesses are eligible for 7(a) loans. SBA guidance is for farms to explore FSA programs first.
· Cooperatives are not eligible for 7(a) loans, per existing SBA regulations.
Paycheck Protection Program
· The bill would provide $350 billion to support loans through a new Paycheck Protection Program for:
o Small employers with 500 employees or fewer, as well as those that meet the current Small Business Administration (SBA) size standards;
o Self-employed individuals and “gig economy” individuals;
· The size of the loans would equal 250 percent of an employer’s average monthly payroll. The maximum loan amount would be $10 million.
· Covered payroll costs include salary, wages, and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave.
· The cost of participation in the program would be reduced for both borrowers and lenders by providing fee waivers, an automatic deferment of payments for one year, and no prepayment penalties.
· Loans would be available immediately through more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions, and SBA would be required to streamline the process to bring additional lenders into the program.
· The Treasury Secretary would be authorized to expedite the addition of new lenders and make further enhancements to quickly expedite delivery of capital to small employers.
· The maximum loan amount for SBA Express loans would be increased from $350,000 to $1 million. Express loans provide borrowers with revolving lines of credit for working capital purposes.
Emergency EIDL Grants
· The bill would expand eligibility for entities suffering economic harm due to COVID-19 to access SBA’s Economic Injury Disaster Loans (EIDL), while also giving SBA more flexibility to process and disperse small dollar loans.
· The bill would allow businesses that apply for an EIDL expedited access to capital through an Emergency Grant—an advance of $10,000 within three days to maintain payroll, provide paid sick leave, and to service other debt obligations.
· $10 billion would be provided to support the expanded EIDL program
· Small agricultural cooperatives of less than 500 employees are eligible for emergency EIDL grants.