Applying for a small business loan through the CARES Act can be a daunting task. This guide will walk you through the process step by step so you can get the funding you need to keep your business afloat.
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The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 27, 2020, provides economic relief to businesses of all sizes that are suffering from the impacts of the COVID-19 pandemic. The CARES Act includes provisions for small businesses to access loans through the Small Business Administration (SBA), including the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDLs).
This guide provides an overview of how to apply for a small business loan through the CARES Act. For more information on eligibility requirements and loan terms, please refer to the SBA’s website or speak with your local SBA representative.
What is the CARES Act?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a $2 trillion relief bill that was signed into law on March 27, 2020 in response to the COVID-19 pandemic. The CARES Act includes a provision that allows small businesses to apply for loans of up to $10 million through the Small Business Administration (SBA).
To be eligible for a loan through the CARES Act, your business must have been in operation as of March 1, 2020 and must have experienced economic hardship as a result of the pandemic. If you are approved for a loan, you will be required to use the funds for certain expenses, such as payroll costs, rent or mortgage payments, and utilities.
If you are interested in applying for a loan through the CARES Act, you can visit the SBA website or contact your local SBA office.
How Does the CARES Act Work?
The CARES Act is a $2 trillion stimulus bill that was passed by Congress in March 2020 in response to the coronavirus pandemic. The act provides relief for small businesses through a number of programs, including the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDLs), and the Main Street Lending Program.
The PPP is a loan program that provides 100% forgivable loans to small businesses who maintain their payroll during the pandemic. To be eligible, businesses must have fewer than 500 employees and must have experienced a 25% reduction in revenue in any quarter of 2020 compared to the same quarter in 2019.
EIDLs are low-interest loans of up to $2 million that can be used to cover payroll and other operating expenses. Businesses of any size are eligible, but businesses with 500 or fewer employees may receive an additional $10,000 grant that does not need to be repaid.
The Main Street Lending Program is a new program that was created by the CARES Act. It provides loans of up to $25 million to small and mid-size businesses who have been affected by the pandemic. To be eligible, businesses must have fewer than 15,000 employees and less than $5 billion in annual revenue.
How to Qualify for a Small Business Loan Through the CARES Act
In order to qualify for a small business loan through the CARES Act, your business must:
-Have been in operation as of March 1, 2020
-Have fewer than 500 employees (or the applicable size standard for your industry)
-Have used or will use the loan proceeds to retain workers and make payroll and other necessary business expenses including mortgage, lease, and utility payments
How to Apply for a Small Business Loan Through the CARES Act
The CARES Act, signed into law on March 27th, 2020, allocated $349 billion to the Paycheck Protection Program (PPP). The PPP is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses.
To apply for a Small Business Loan through the CARES Act:
-Contact your local SBA District Office or reach out to an SBA Resource Partner. Find your local office here: https://www.sba.gov/about-sba/sba-newsroom/contact-sba
-If you’re interested in applying for an EIDL, visit https://disasterloanassistance.sba.gov/. You can also reach out to your local SBA District Office or an SBA Resource Partner
-Carefully review the requirements and necessary documentation outlined in the application process
-Gather required documentation
-Complete the application process
What Documentation is Needed to Apply for a Small Business Loan Through the CARES Act?
Documentation Needed to Apply for a Small Business Loan Through the CARES Act:
In order to apply for a small business loan through the CARES Act, you will need to provide documentation of your small business’s financial situation. This can include tax returns, financial statements, and other information about your business’s income and expenses. You will also need to provide personal financial information for each owner of the business.
How Long Does it Take to Get Approved for a Small Business Loan Through the CARES Act?
The Small Business Administration (SBA) is currently processing applications for small business loans through the CARES Act. The SBA has not provided a specific timeline for when approved applications will receive funding, but they have stated that they are working as quickly as possible to get funds to businesses in need.
What are the Terms and Conditions of a Small Business Loan Through the CARES Act?
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted in March 2020 and provides small businesses with loan opportunities to help them keep their businesses afloat during the COVID-19 pandemic. If you’re a small business owner who is interested in applying for a small business loan through the CARES Act, there are a few things you need to know.
First, the CARES Act offers two types of loans for small businesses: the Paycheck Protection Program (PPP) loan and the Economic Injury Disaster Loan (EIDL). PPP loans are meant for businesses that need help with paying their employees, while EIDL loans are meant for businesses that have been economically impacted by the pandemic.
Second, there are different terms and conditions for each type of loan. For example, PPP loans have a maximum borrowing amount of $10 million, while EIDL loans have a maximum borrowing amount of $2 million. Additionally, PPP loans must be used for payroll costs, mortgage interest, rent, and utility payments, while EIDL loans can be used for working capital expenses such as inventory or equipment.
Third, you will need to provide documentation to prove that your business has been affected by the pandemic in order to qualify for either type of loan. For PPP loans, this includes documentation such as payroll records or bank statements. For EIDL loans, this includes documentation such as income statements or tax returns.
If you’re interested in applying for a small business loan through the CARES Act, be sure to research both types of loans and understand the terms and conditions before you apply.
What are the Pros and Cons of a Small Business Loan Through the CARES Act?
There are many small business owners who are wondering if they should apply for a small business loan through the CARES Act. While there are some pros and cons to this option, it ultimately depends on your specific situation and needs.
Some of the pros of applying for a small business loan through the CARES Act include:
-You may be eligible for a forgivable loan, which means you would not have to repay the loan if you use it for eligible expenses
-You can use the loan for a variety of expenses, including payroll, rent, utilities, and more
-The application process is relatively simple and can be done entirely online
-You may receive funding quickly, as loans are processed on a first-come, first-served basis
Some of the cons of applying for a small business loan through the CARES Act include:
-The loans are not available to businesses with more than 500 employees
-You will have to start repaying the loan after six months
-If you do not spend the money on eligible expenses, you will not be able to have the loan forgiven
-There is a limited amount of money available through this program, so not all businesses who apply will receive funding
The CARES Act provides a number of programs and initiatives to help small businesses weather the COVID-19 pandemic. One of these is the Paycheck Protection Program, which offers loans to small businesses to help them keep their workers on the payroll.
If you’re a small business owner interested in applying for a loan through the Paycheck Protection Program, there are a few things you need to know. First, you’ll need to work with an eligible lender. Second, you’ll need to submit some basic information about your business and your financial needs.
Once you’ve done that, you can expect to receive your loan funds within 10 days. You can use the funds from your loan for a variety of expenses, including payroll costs, rent, utilities, and mortgage interest. Just be sure to keep track of how you use the money, as you’ll need to provide documentation of your expenses when you apply for loan forgiveness.
If you’re looking for other ways to get financial assistance during the COVID-19 pandemic, be sure to check out our guide to small business loans and relief programs.