About Government-Sponsored COVID-19 Loans
In response to the overwhelming disruptions to business as usual that the coronavirus known as COVID-19 brought upon our nation, Congress passed the CARES Act and President Trump signed it into law on March 27, 2020. Worth more than $2 trillion, this relief package included provisions for loans to businesses known as the Paycheck Protection Program Loan (now closed) and the Economic Injury Disaster Loans (EIDLs; still available).
Hernandez & Associates Law Firm has helped numerous small business owners apply for these loans appropriately to their individual circumstances. We welcome the opportunity to simplify necessary processes for you and troubleshoot as necessary if you have already applied and encountered obstacles.
About The Loan Programs
Both the Paycheck Protection Program Loans and Economic Injury Disaster Loans have been administered through the Small Business Administration (SBA). Our law firm can streamline the application, deferment and forgiveness verification processes for any eligible small business. If you are unsure whether your business qualifies, please contact us.
The Paycheck Protection Program Loans
The Paycheck Protection Program Loans included $350 billion earmarked for small businesses, up to $10 million each for companies with fewer than 500 employees. The loans could be used to cover business costs associated with payroll, employee benefits and leave, mortgage interest payments, debt refinancing, rent and utilities. The program required borrowers to certify in good faith that COVID-19 had impacted them and that they would use the loan funds to retain workers, maintain payroll and manage other debt obligations.
Interest was to be no higher than 4% and repayment could be deferred by up to one year. Furthermore, Section 1106 of the Act, titled “Loan Forgiveness,” stated that the U.S. government would forgive the amount that was used to pay: (1) payroll costs; (2) mortgage interest; (3) rent and (4) utilities, each for up to eight weeks after the loan was issued.
The Paycheck Protection Program Loans program ceased issuing new loans as of August 8, 2020. Our law firm can help you navigate loan forgiveness if you already took out one of these loans.
The Economic Injury Disaster Loans (EIDLs)
The Economic Injury Disaster Loans (EIDLs) also come from an appropriation of $10 billion from the CARES Act, with up to $2 million available to small businesses impacted by natural disasters, including the COVID-19 pandemic. A company that qualifies and has obtained both a Paycheck Protection Program Loan and an EIDL is not allowed to duplicate use of the funds obtained from the two. The CARES Act also provides for a $10,000 emergency advance available within three days of submitting an application for an EIDL while a correctly submitted application is pending. The SBA does not require such advances to be repaid.
EIDLs are intended to cover certain expenses such as fixed debts, payroll and accounts payable, but are not to replace lost sales or profits. Other uses not allowed including debt refinancing, paying back loans to other federal agencies, satisfying tax penalty obligations, repairing physical damage to properties, or paying stockholder dividends. Proceeds may be used to bridge gaps created by interrupted supply chains.
For More Information
Please contact us to let us explain how we can help ensure your right to funds or forgiveness of proceeds from these loans that your business qualifies for. Call 251-272-5937 or email us to request a consultation.
You can prepare to get started right away applying for an Economic Injury Disaster Loan (EIDL) by assembling the documents listed below. Let us know if you need clarification on requirements, procedures and financial details of our services.
- Completed SBA loan application (SBA Form 5)
- Tax Information Authorization (IRS Form 4506T) for the applicant, principals and affiliates
- Complete copies of the most recent Federal Income Tax Return
- Schedule of Liabilities (SBA Form 2202)
- Personal Financial Statement (SBA Form 413)