As businesses are required to remain shut down as a result of the COVID-19 pandemic, access to capital resources continues to be a pressing issue for our clients. This FAQ addresses many questions that businesses may have about governmental programs that can provide capital resource support in the wake of COVID-19. When reviewing the resources and information below, it is important to note that the current situation is obviously very fluid, and rules and facts change daily.
Q: Where can I find access to financial resources in response to COVID-19?
The PPP offers loan forgiveness for covered payments made in the eight-week period following the disbursement of the loan funds, provided that 75% of the amount forgiven must be attributed to payroll costs. The interest rate for PPP loans is 1% and loan payments are automatically deferred for six months. PPP loans are available from private lenders and are subject to approval by the Small Business Administration (“SBA”).
For an in-depth discussion of the PPP loan program, please see our FAQ and Supplemental FAQ on the topic. On April 23, 2020, Congress allocated an additional $310 billion in funding for the PPP loan program, and lenders began accepting loan applications again on April 27, 2020.
The SBA also has this link to help businesses find lenders to provide loans.
Please be wary of scammers looking to take advantage of the current high demand for SBA loans. Legal advisers and their clients should rely on information from governmental websites (ending in “.gov”), and check the Better Business Bureau (“BBB”) for businesses that are willing to assist in obtaining loans from the SBA. The SBA has this advisory for tips to avoid the common pitfalls of scammers.
Q: What other resources can I look to for helpful information?
Q: What is the Federal Reserve doing to aid the economy?
On April 9, the Federal Reserve took additional actions to provide up to $2.3 trillion in loans to support the economy. This funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.
The Federal Reserve’s statement notes that its programs will: