CARES Act

On March 27, 2020 President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) with two key programs, the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).

Another provision of the CARES Act, the Small Business Debt Relief Program, provides immediate relief to small businesses with current non-disaster Small Business Administration (SBA) loans administered under Section 7(a) of the Small Business Act.

Additionally, the federal government is offering aid to eligible recipients in the form of economic impact payments, also known as stimulus payments.

Economic Impact Payments (Stimulus Payments)

The IRS has begun the distribution of stimulus payments. Many Americans will receive their stimulus payment by direct deposit in April 2020, based on the direct deposit information on file with the IRS. In late April or early May, the IRS is expected to begin sending paper stimulus checks beginning with the lower adjusted gross income taxpayers first. The issuance of paper checks may continue through the summer. You can check the status of your payment by using the IRS Get My Payment tool.

Per the IRS guidelines, if you no longer have the bank account identified for direct deposit on your tax return, the bank will reject the deposit and you will be reissued your payment via check to the address the IRS has on file for you.

We encourage you to utilize Great Western ebanking, our online banking platform, to view your account balance for payment availability. You are also able to deposit paper checks through our Great Western ebanking mobile app with Mobile Check Deposit. Learn more about Great Western ebanking here.

To find complete information about the payments, please visit IRS.gov/coronavirus/economic-impact-payment-information-center.

Paycheck Protection Plan (PPP)

The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing $350 billion toward job retention and certain other expenses. It provides cash-flow assistance through a 100% federally guaranteed/unsecured loan to maintain payroll costs to be disbursed by June 30, 2020.

By submitting a PPP application, a borrower is certifying the following statement: “Current economic uncertainty makes this loan necessary to support the ongoing operations of the Applicant.”

Recent guidance states businesses that meet the following criteria would not qualify for a PPP loan: "Businesses who, with current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business." Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.

Who is Eligible

Small businesses
Eligible nonprofit organizations
Veterans organizations
Tribal businesses (as described in the Small Business Act)
Individuals who are self-employed
Independent contractors (if they also meet program size standards)

What is Included in Payroll Costs

Salary/wages/tips
Sick/family leave/PTO
Severance payments
Group health benefits
Retirement benefits
State or local taxes assessed on employee compensation

What are the Details¹

Loan amounts up to $10M
Payments deferred for 6 months
SBA guarantees 100% of PPP loans
There are no loan fees to the borrower
Fixed interest rate of 1%
There are no personal guarantees required
No collateral is required

Amounts may be forgiven by the government if used for eligible expenses and with verification related to retaining employees and pay rates. Forgiveness is not automatic. Amounts not forgiven would be fully amortized over a term prescribed by the SBA.

¹Loan programs details are subject to change as prescribed by the US Department of Treasury and/or SBA.

Looking for more information?

Refer to the following links and information regarding the CARES Act and the Paycheck Protection Program (PPP).

US Department of Treasury: https://home.treasury.gov/
US Small Business Administration: https://www.sba.gov

As you will find in the Treasury’s document, PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET: BORROWERS, you will need to provide your lender with payroll documentation in addition to the application.

Additional detail will be provided and additional information may be required based on SBA published regulations for the PPP application process.

Economic Injury Disaster Loan (EIDL)

While the Economic Injury Disaster Loans are typically provided at low interest rates to help businesses and homeowners recover from declared disasters, such as hurricanes or floods, the SBA modified this program to address the current COVID-19 pandemic. In addition, the SBA will automatically defer payments on all existing disaster loans until December 31, 2020 to further assist small businesses at this time.

EIDLs are loans originated and funded directly by the SBA without the involvement of banks and the maximum loan limit is $2,000,000. These loans require satisfactory credit history, ability to repay underwriting, personal guarantees from owners, and collateral in most circumstances.

To apply for an EIDL, which must be done directly with the SBA, please go to www.sba.gov

SBA Debt Relief Program

The SBA Debt Relief Program will provide immediate relief to small businesses with non-disaster SBA loans to help overcome the hardships the COVID-19 Pandemic has caused. With this Program, the SBA will automatically pay the principal, interest, and fees of current 7(a) and microloans for a period of six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law. Please contact your Banker if you are a current SBA customer for more details.

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