- Forgivable loans. The CARES Act created a new type of loan that is potentially forgivable up to 100% of the principal amount borrowed. This is tantamount to free money. (The SBA also offers non-forgivable loans on excellent terms.)
- Non-repayable Grants Up To $10,000. If they are unable to obtain a loan, some borrowers may be able to obtain an advance/grant of up to $10,000, which does not have to be repaid.
- There will be high demand, and a limited supply. Even though the federal government has made billions of dollars in loans available, the number of small businesses applying will make these go quick.
- Keep your key employees employed. The forgivable loans are meant to give businesses money to pay their employees, and are forgivable to the extent they are used to pay employees. Why wouldn’t you keep your hard-to-replace key employees employed?
- The forgivable loans do not require collateral or guarantees. Some other types of SBA loans do require collateral and/or guarantees.
- This crisis will get worse before it gets better. We still don’t know how the COVID-19 disaster will progress, but what we do know is that initial projections were all wrong, and the US now has the highest level of COVID-19 cases of anywhere in the world. Some experts are cautioning to expect an economic downturn on the level of the Great Depression. Prudence dictates that we must prepare for the worst.
In short, there is very little reason NOT to apply for a SBA loan, and even less reason not to call us to talk through your options. Our attorneys and staff can help you learn about the different types of SBA assistance potentially available to your small business, and assist you in submitting a timely and complete loan application.
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