Relief for small business owners

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides the two following loan assistance programs for small business owners and non-profits:

First, The Paycheck Protection Program (PPP) – Through this loan program, Continental Bank can offer SBA loans to eligible businesses to cover costs such as payroll support, employee salaries, rent, utilities, and other debt obligations. These loans are in high demand because they generously offer:

Maximum loan amount up to $10 million
Interest rate of 1.0%
Loan forgiveness eligibility for proceeds used in the first 24 weeks
Maturity up to 5 years
First payment deferred for 6 months
100% guarantee by SBA
No collateral
No personal guarantees
No borrower fees payable to Continental Bank or the SBA

Second, The Economic Injury Disaster Loan (EIDL) program – The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue they are experiencing. This program is administered directly through the SBA and offers low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. To apply for these loans and determine eligibility, visit

https://disasterloan.sba.gov/ela/.

FAQs

When can I apply?

• The SBA has announced that starting April 3, 2020, small businesses and sole proprietorships can apply for loans through the Paycheck Protection Program. Continental will be ready to accept applications at that time (pending the SBA’s final application details).
• In line with SBA guidelines, starting April 10, 2020, we will accept applications from independent contractors and self-employed individuals.

Who is eligible?

• All small businesses — including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors — with 500 or fewer employees can apply.
• Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.

How can I prepare to apply?

Although some sample drafts of the application have been published online, the SBA has not yet released its final application requirements. To avoid duplicating work before the application requirements are finalized, we encourage you to gather the following documentation:

• Average monthly payroll for 2019¹ on an annualized basis for each employee
• Seasonal businesses may elect to provide average monthly payroll from February 15, 2019 to June 30, 2019, on an annualized basis for each employee
• New businesses: average monthly payroll may be calculated using the time period from January 1, 2020 to February 29, 2020, excluding costs over $100,000.
• Entity documents including Articles of Incorporation or Organization, Bylaws and Partnership Agreements as applicable will likely be needed as well.

We encourage you to apply quickly, as funds are limited.

How much can I borrow?

The eligible loan amount determined by combining the following payroll categories into a monthly average and multiplying the result by 2.5X, not to exceed $10 million:

• Salary, wages, commissions, tips (capped at $100,000 annualized for each employee)
• Employee benefits including: vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payments for group health care benefits including insurance premiums and payment of any retirement benefit
• State and local taxes assessed on compensation
• For sole proprietor or independent contractors: wages, commissions, income, or net earnings from self-employment capped at $100,000 on an annualized basis for each employee

What can I use the loan for?

• Payroll costs — including benefits
• Interest on mortgage obligations, incurred before February 15, 2020
• Rent, under lease agreements in force before February 15, 2020
• Utilities, for which service began before February 15, 2020

Will the loan be forgiven?

Funds are provided in the form of loans that can be fully forgiven when employee and compensation levels are maintained and when loan proceeds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).

Learn more about loan forgiveness from the SBA here. Read the article with our most current updates here

What are the loan terms?