Just days after Congress passed the
The agencies said Tuesday that starting Friday borrowers can request loans under the $349 billion Payroll Protection Program using any SBA 7(a)-approved lender, bank, credit union or farm credit administration institution.
The Treasury and SBA also distributed the
The Paycheck Protection Program, which is being administered through the 7(a) program, will provide borrowers with up to $10 million that they can use to pay employees and other basic operational expenses such as rent, mortgage interest and utilities.
Borrowers using the funds for those purposes can have as much as 100% of the loans converted into grants and forgiven.
Loan amounts to be forgiven will be “based on the employer maintaining or quickly rehiring employees and maintaining salary level,” according to the agencies' guidance. If full-time headcount declines, or if salaries and wages decrease, forgiveness is reduced, and the remaining amount converts to a loan.
Businesses with up to 500 employees are eligible to borrow under the program, including sole proprietorships, independent contractors and self-employed individuals.
While fintech lenders are
The Treasury’s guidance didn’t address fintech lenders, but it mentioned that “other regulated lenders will be available to make these loans once they are approved and enrolled in the program.”
The program aims to distribute its funding by the end of June.
“Speed is the operative word,” Carranza said in a press release.
“Applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans," she added. "Our goal is to position lenders as the single point-of-contact for small businesses. The application, loan processing, and disbursement of funds will all be administered at the community level.”
Bankers say they’re gearing up to meet the challenge.
“This is not your typical SBA program where borrowers are going to come to banks at various times to borrow money to support a new business,” said Frank Sorrentino, chairman and CEO of the $6.2 billion-asset ConnectOne Bancorp in Englewood Cliffs, N.J. “This is going to be every single small business that’s affected by [coronavirus], which is just about everybody, coming through the gate all at the same time, all on the same day and all expecting very fast execution.”
“Banks are ready to do everything humanly possible to support U.S. small businesses and will continue working with SBA to optimize ramping up an approximately $20 billion annual program to nearly $350 billion in just a few months,” Consumer Bankers Association President and CEO Richard Hunt said in a Tuesday press release.
The 7(a) program backs loans made by participating lenders. The SBA guaranteed $23.7 billion in loans during the 2019 fiscal year, which ended Sept. 30.
