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As Congress hashes out the final details and provisions of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act” or the “Bill”), businesses and individuals alike are hoping for the prompt completion of the much-needed stimulus benefits provided therein.

On Tuesday afternoon, Congress members described the Bill to be “at the 2-yard line’’ and “in the red zone” … a coincidental reference to the only major American sport whose season has not yet been disrupted by COVID-19.

The CARES Act's proposed legislation includes multiple sections aimed at providing direct and indirect financial relief to businesses and individuals severely affected by the COVID-19 pandemic. Division A of the Bill addresses direct financial relief to small business concerns around the country through temporary amendments to the Small Business Association ("SBA") 7(a) Loan Program.

Under the most recent draft available, the Bill stands to extend the eligibility requirements and availability of funds under the current 7(a) Loan Program to assist small businesses in covering payroll and operating expenses during this difficult time. Also, the Bill would include provisions for the deferral of payments on such loans, as well as loan forgiveness on certain funds utilized to maintain payroll costs through the covered period (subject to specific restrictions/reductions). As an incentive to financial institutions, the Bill also includes an increase to the percentage guaranteed by the SBA during the covered period.

Once the CARES ACT is passed by Congress and signed into law by President Trump, the SBA will have 30 days to provide guidance and regulations implementing the provisions of the Bill.

On December 27, 2020, an additional stimulus package of $900 billion was approved by the federal government. This package extends the existing CARES Act provisions and creates new provisions.

The new package allocates $900 billion for the following programs:

$325 billion for small businesses.
  1. $284 billion are provided to the small businesses through the Paycheck Protection Program ("PPP") loans. There have been significant changes made to the existing PPP; these are:

    • Simplification of the PPP applications, including expenses incurred in PPP loans to get rebates, and expanding the PPP loan amount for businesses in the food service and accommodations industries.
    • Certain small businesses that have experienced a quarterly reduction of more than 25 percent in gross receipts to be eligible for the second forgivable PPP loan.
    • If the firm does not satisfy the eligibility criteria for PPP loans, these loans will be treated as debt.

  2. $15 billion has been funded for arts and music venues, movie theaters, and other cultural institutions.

  3. The American Rescue Plan Act of March 2021 provides pandemic unemployment assistance, which would be extended until Sept. 6 for self-employed and part-time individuals.

  4. Cash payment of $1,400 will be paid to individuals earning less than $75,000 annually, and households with earnings less than $ 112,500, and couples with income less than $150,000.

  5. $30 Billion to provide rental assistance for the homeless and another $10 billion to help people with mortgages.

  6. Emergency Capital Investment program was started with a funding of $9 billion to the US Treasury Department for investing in financial institutions with low and moderate-income to lend and invest in LMI and minority communities.

  7. Another $3 billion for Community Development Financial Institutions (CDFI) to curb the impact of COVID-19.

  8. $45 billion is funded to improvise the transportation facility, which includes $15 billion to support airlines payroll, $ 1 billion for paying airline contractors, $2 billion for airports, and $14 billion set aside to fund for transit agency shortfalls, $10 for the state highways and $1 in Amtrak funding.

  9. A fund of $82 billion was allocated for schools; funds would be made available via Governors Emergency Education Relief fund, Elementary and Secondary School Emergency Relief Fund, and Higher Education Emergency Relief Fund as specified in the CARES Act.

SBA Loan Application (SBA Form 1919) – Please note it may be the case that a separate application will be required relating to the amended program.

Personal Background and Financial Statement – To assess your eligibility, the SBA also requires you to complete the following forms:
  • Statement of Personal History (SBA Form 912)
  • Personal Financial Statement (SBA Form 413)

Business Financial Statements – To support your application and demonstrate your ability to repay the loan, prepare and include the following financial statements:

  • Profit and Loss (P&L) Statement – This must be current within 180 days of your application. Also include supplementary schedules from the last three fiscal years.
  • Projected Financial Statements – Include a detailed, one-year projection of income and finances and attach a written explanation of how you expect to achieve this projection.

Ownership and Affiliations – Include a list of names and addresses of any subsidiaries and affiliates, including concerns in which you hold a controlling interest and other concerns that may be affiliated by stock ownership, franchise, a proposed merger, or otherwise with you.

Business Certificate/License – Your original business license or certificate of doing business. If your business is a corporation, stamp your corporate seal on the SBA loan application form.

Loan Application History – Include records of any loans you may have applied for in the past.

Income Tax Returns – Include signed personal and business federal income tax returns of your business's principals for the previous three years.

Resumes – Include personal résumés for each principal.

Business Overview and History – Provide a brief history of the business and its challenges. Include an explanation of why the SBA loan is needed and how it will help the business.

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