March 27, 2020: On March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. The law provides emergency assistance for many businesses affected by the recent COVID-19 pandemic.
The CARES Act provides for small business concerns (qualified under the Small Business Act) and other businesses with less than 500 employees (as described below) to be eligible for PPP loans.
The legislation includes a new loan program – the Paycheck Protection Program administered through the SBA – that provides up to $349 billion in loans to eligible entities, with such loans being subject to forgiveness under certain circumstances. The loans are 100% federally guaranteed available under a new subsection 36 of Section 7(a) of the Small Business Act.
The loans may be used for a variety of purposes, including payroll costs (as described below), rent, utilities, mortgage interest (not principal) and interest on debt existing prior to February 15, 2020. No collateral or personal guaranties are required.
Application Process: Eligible entities may file applications with an SBA-approved lender. Lenders have been delegated authority to make loans without SBA review. For example, in Illinois, Wintrust is the largest SBA-approved lender.
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