SBA Loans and your Small Business in 2021

a SBA Loan from the (Small Business Administration) is the solution if you are seeking financial help for a small business in response to the coronavirus (COVID-19) outbreak, or just want to know how to obtain financing to expand your scale.

SBA low-interest long-term loans are a viable option for business owners who have suffered major physical or economic losses related to the disaster or want to develop their own business but cannot obtain another non-governmental financing.

Key points

  • Legislation enacted on December 27, 2020, provides new funding for the Payroll Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program, as well as forgivable EIDL target prepayments and closed venue operator (SVO) grants Of funds.
  • PPP loans are provided by private lenders, while EIDL loans and SVO grants are generated by funds provided by the government.
  • The SBA business expansion loan is a secured loan with funds from approved private lenders.
  • Other SBA programs include Express Bridge loans, 7(a) debt relief loans, loan deferrals, and other programs.
SBA Loans and your Small Business

The Consolidated Appropriations Act, 2021

The 2021 Consolidated Appropriations Act (CAA), which was signed into law on December 27, 2020, is not itself a government loan program. The legislation provides additional funding and rule changes for several government programs including the Payroll Protection Program (PPP), the Economic Injury Disaster Loan (EIDL) program, and the EIDL advance payment.

It also includes funding for the new “Closed Venue Operator (SVO) Grant” program. Descriptions of the programs below reflect changes made by the CAA. Additional guidance from the Treasury Department and SBA Loans may require further updates.

Paycheck Protection Program (PPP) on SBA Loans

On March 27, 2020, the “Salary Protection Plan” enacted through the “CARES Act” provides small businesses with no more than 500 employees (including sole proprietorships, independent contractors, and self-employed individuals) with SBA worth up to 10 million U.S. dollars Emergency 7(a) loan, affected by COVID-19.

The plan has been revised through the PPP Flexibility Act of 2020, in which the new guidelines allow for partial or total exemption of partial forgiveness, provided that at least 60% (formerly 75%) of forgiveness is used for salary and 40% (formerly 25%). %) is used for salary payment. Forgive the mortgage interest, rent, and utility bills.

Your loan did not postpone payment for 6 months but postponed until SBA remitted the forgiven amount to your lender. If you do not seek forgiveness, your payment will be postponed for 10 months from the end of the coverage period.

Like the original PPP plan, no mortgage is required and no fees are charged for the loan. However, you now have five years instead of two years to pay off the loan at the same fixed rate of 1% as before.

The PPP Flexibility Act of 2020 further stipulates that if you sincerely want to hire an employee (same hours, same salary) and record it, you can exclude the employee from your position for forgiveness, if they reject your offer.

Paycheck Protection Program (PPP) SBA Loan Refresh

By 2021, the “Consolidated Appropriations Act” provides $284 billion in new PPP loans, including special assets for companies in poor areas and companies with fewer or fewer employees than 10 people.

The legislation provides qualified companies with less than or equal to 500 employees with up to US$10 million in the first concessional PPP loan, and previous borrowers with less than or equal to 300 employees provide a second drawdown loan of US$2 million.

If you have refunded all or part of the PPP loan, you can reapply for the maximum applicable amount, provided you have not received forgiveness. Also, if you qualify for a higher loan limit due to a temporary final rule change, you can modify the loan limit together with the lender even after forgiveness.

Economic Injury Disaster Loan (EIDL)

The SBA Coronavirus Disaster Assistance Loan is designed to help businesses recover from the economic impact of COVID-19. It can provide disaster relief loans of up to $2 million for up to 30 years. Small business owners in all 50 states; Washington, DC.; And US territories can apply.

SBA Loans can be used to pay fixed debts, payroll, accounts payable, and other bills that cannot be paid due to the impact of COVID-19. The interest rate for small businesses is 3.75%. Non-profit organizations only pay 2.75%.