More financial relief on the way for small businesses.
Loans will have 5-year terms with 1% interest rate
NEWYORK >> For Nancy Sinoway, a second coronavirus relief loan would increase the chances that her dressmaking business will survive.
“I could use it for marketing, for new samples. I could use it as a lifeline,” says Sinoway, who designs and makes dresses for occasions like weddings and proms. She was f looded with order cancellations starting in early March as the virus spread and large gatherings and events were abandoned.
Sinoway got a Paycheck Protection Program loan last May and used it to pay her three employees. But the loan money fell far short of what she needed to maintain her Port Washington, New York, shop. She was forced to close it and move the business into her home.
Millions of business owners like Sinoway are about to get help. The Small Business Administration and the Treasury Department are preparing to revive the PPP five months after its first two rounds of funding ended.
In the latest round, businesses that received loans last year will be able to borrow up to $2 million as long as they have no more than 300 employees and suffered at least a 25% drop in quarterly revenue. First- time borrowers with no more than 500 workers will be able to borrow up to $10 million.
The loans, which can be forgiven, will have five-year terms and carry an interest rate of 1%.
The SBA will initially accept only applications submitted by community financial institutions, or CFIs, lenders whose customers are minority- owned and economically disadvantaged businesses. Starting Monday, applications for firsttime borrowers submitted by these lenders will accepted, and on Wednesday, applications for second loans. The SBA said it would begin accepting applications from all its lenders within a few days of that initial period reserved for CFIs.
As with the first two rounds of the PPP, applications must be submitted online at banks and other SBA-approved lenders. All applications must be submitted and approved by March 31. Loan amounts are calculated using a company’s payroll expenses; businesses can use either their 2019 or 2020 payroll to compute how much they can ask for.
Companies will have 24 weeks from the date they receive a loan to use the money. While 60% of the