Coronavirus / COVID-19: CARES Act is Signed Into Law
Important Loan Program Updates
On the afternoon of March 27th, 2020, the CARES Act, which is the largest stimulus bill ever, moved from the Senate into the House of Representatives where it was approved, and then to the President where it was signed into U.S. law. There are many things contained in the CARES Act meant to lessen the blow everyone in the United States is feeling from small business owners to big business and everyday citizens. There is much to digest from the bill and the agencies set to carry out the Bill’s mandates will likely be releasing additional details in the days, weeks and months to come regarding how provisions in the bill will work and how funds will be allocated.
For small business owners there are three main items contained in the bill that could impact you and your business from a lending perspective. We have continued to update a Coronavirus page on our website that provides substantial details on all of the measures passed by Congress that could impact you, which you can access below:
The three main loan items included in this legislation that could impact you are as follows (see our webpage for substantially more details):
Paycheck Protection Program – the program is administered through roughly 800 SBA approved lenders nationwide and although setup as a “loan”, the program really acts more like a grant as a portion if not all of the funds can be forgiven if certain requirements are met through the end of 2020. This program will allow a business, non-profit, and independent contractor to borrow up to 2.5 times certain key expenses such as salaries (within limits), benefits, utilities, and rent (or interest on a mortgage if the property is owner-occupied).
SBA 7A Payment Relief – it appears all existing SBA 7A loans and any new SBA 7A loans made through September of 2020 will benefit from six months of loan payments made directly by the SBA so long as those loans are in Regular Servicing Status (meaning current and not in default).
SBA Express Loan Program – the maximum loan amount available under the SBA Express Loan program has increased from $350,000 to $1 million through December 31st, 2020. The SBA Express Loan program is a simplified program versus the standard SBA 7A loan program, making it simpler and quicker to borrow funds for your business, including money to fund working capital needs.
Previous legislation already provided the following:
SBA Disaster Assistance Program – this program must be applied for directly through the SBA and guidance suggests a business or non-profit can qualify for loan with a principal balance based on up to 6 months of gross profits in the form of a 30-year loan at a low interest rate. You can learn more about this program as well as get a link to apply for the program via our website page dedicated to the Coronavirus.
As it relates to the above programs, the SBA Disaster Assistance Loans must be applied for directly with the SBA, and you can find a link on our webpage to do so. If you are interested in applying for that loan, we recommend you do so directly. The application is not difficult, and it is processed directly by the SBA.
As it relates to the SBA Paycheck Protection Program, we have gotten very mixed reactions from our lending partners and the initial indications make it appear that their focus is going to be on supporting existing customers with that program versus taking on new customers. Because of this, here at Commercial Lending X we will not be processing loans strictly for the SBA Paycheck Protection Program. If you are interested in the Paycheck Protection Program alone, we recommend you apply directly to your existing lender.
We will continue, as always, to process applications for the SBA Express Loan Program and standard SBA 7A loan programs, as well as the SBA 504 loan program and all other commercial loan types.
Outside of the two new SBA options detailed above, there are many other financing options we have available to help our clients through these challenging times. Those options include the following:
Conventional SBA 7A (including the SBA Express Loan program) or SBA 504 loans providing real estate, equipment, inventory, and working capital financing to customers that do not qualify for SBA Disaster Assistance loans or to businesses in need of capital for purposes not covered under the SBA Disaster Assistance program.
Traditional Bank Financing including lines of credit, equipment debt, and cash-out owner-occupied or investment mortgage loans
Asset based lenders and factoring companies lending money on accounts receivable, inventory, and equipment
Non-Bank real estate lenders providing conforming fixed rate owner-occupied and investment real estate loans (including single family investment properties) with cash-out available up to 70% to 75% of value
Hard Money / Private Money short-term and bridge loans to provide an influx of capital on a short-term basis.
We can be reached at info@commerciallendingx.com or at 888-975-0007. Thank you and we hope you stay healthy and safe and experience a quick recovery.
