NEW YORK – Small businesses seeking loans through the government's $2 trillion coronavirus relief package could receive money as soon as Friday.
That prediction came Tuesday from senior administration officials who spoke to reporters about the details of the loan program.
Companies will be able to submit applications on Friday. Because the government is using an approval process that has been stripped down from the one used for traditional business loans, the money can be available to borrowers the same day, the officials said.
The officials spoke with reporters on the condition of anonymity because the details have not been officially made public.
The loans are available to small businesses ranging from sole proprietors and freelancers to companies with up to 500 employees.
The money is intended to help companies that have suffered massive revenue losses due to the outbreak, including restaurants across the country forced to shut down.
The loans are being guaranteed by the Small Business Administration. They provide for deferred payments and offer the prospect of forgiveness if the money is used to retain workers or hire back those who have been laid off.
Companies can borrow up to $10 million at an annual rate of 0.5% based on their payroll costs as well as their expenses for rent, mortgage interest and utilities. They will need to provide documentation of those expenses, the officials said.
All banks, credit unions and institutions in the farm credit system that are federally insured will be able to make the loans, not just the institutions that are current SBA lenders. The government will consider accepting non-bank lenders like online companies as program participants. It is expected that most borrowers will apply for the loans online.
The loans, under what's being called the Paycheck Protection Program, are one facet of the government's relief program. The SBA has begun lending money under its Economic Injury Disaster Loan program and is also offering bridge loans that offer up to $25,000 in loan money with a quick turnaround. Details on all the coronavirus relief loans can be found on the SBA website at www.sba.gov/coronavirus.
In addition, the Federal Reserve plans a program of direct loans to small businesses. Details of that program have not been released.