Stimulus Offers Loans with Option for Forgiveness

The COVID-19 stimulus package President Trump signed just days ago makes billions of dollars available to small businesses across the country, injecting a boost into the manufacturing sector and other businesses at a crucial moment.

The $2.2 trillion response deal paves the way for small businesses to acquire grants and loans—with the opportunity for loan forgiveness for businesses that can quickly ramp up their workforce. The grants and loans will cover payroll and other expenses.

The bill also lets workers obtain extended and increased unemployment benefits if they are laid off or furloughed. Among highlights:

$10,000 Advances on SBA Loans

The stimulus package makes $10 billion available to provide grants in the form of $10,000 advances to small businesses to cover payroll and other expenses. The advances from the Small Business Administration (SBA), known as economic injury disaster loans, should come within three days of applying.

Businesses need not repay the advances, even if applicants are eventually denied a loan.

The bill also authorizes more banks and financial institutions to provide SBA loans, so most members can apply through their current institution.

No-Fee Loans Up To $10 Million

For businesses seeking assistance outside the SBA, the stimulus package creates a new $350 billion program offering small businesses no-fee loans up to $10 million.

Businesses can borrow up to 125 percent of average payroll costs over eight weeks, using the money to support payroll plus any other expenses with the 25 percent boost. These loans are administered directly by banks, and underwriting will essentially be waived. Businesses must simply demonstrate that they were a viable business in early February and show their payroll costs before layoffs across the country began.

This is structured as a loan, but for companies that maintain employees, eight weeks of payroll costs, interest on mortgage obligations, rent, and utilities will be forgiven. Small business owners should research the Paycheck Protection Program (PPP).

$17 Billion for Small Business/Economic Development

The package provides $17 billion for “immediate relief” for small businesses that have existing SBA loans, including 7(a) loans for financial assistance and 504 loans for economic development.

The SBA will cover all loan payments for existing borrowers, including principle and interest, for six months. There is also a six-month window when small businesses can get “protection on payments and forgiveness” on the loans.

The bill also waives fees for veteran small business owners and their spouses who take out 7(a) express loans.

Expanded Unemployment Package

Unemployment insurance will see both a bump in payments and an expansion virtually for everyone who was employed before COVID-19 dealt a crushing blow to the economy.

The package allows furloughed workers to receive their salaries for four months and adds $600 on top of what state unemployment departments currently provide to impacted workers.

Assistance for Farmers and Ranchers

Spending authority for the Depression-era financial institution known as the Commodity Credit Corporation will be replenished to $14 billion.
The stimulus package also sets up a $9.5 billion emergency fund for producers, including fresh fruit and vegetable growers, dairy farmers and cattle ranchers, along with local food systems like farmers markets.

Personal Checks for Taxpayers

Taxpayers who filed electronically will receive direct deposit payments approved as part of the stimulus; others will receive paper checks by mail.

Most taxpayers who earn less than $75,000 will receive at least $1,200 and $500 for each child in coming weeks. Married taxpayers filing jointly who earn less than $150,000 will receive $2,400 and $500 for each child.

Sources:, Farm Progress