By JOYCE M. ROSENBERG, AP Business Writer
NEW YORK (AP) – Small businesses seeking loans through the government’s $ 2 trillion coronavirus relief program could receive cash as early as Friday.
The prediction came from senior administration officials on Tuesday who spoke to reporters about the details of the loan program.
Companies will be able to submit their applications on Friday. Because the government uses an approval process that has been removed from that used for traditional commercial loans, the money may be available to borrowers on the same day, officials said.
Officials spoke to reporters on condition of anonymity as details have not been officially made public.
Loans are available for small businesses ranging from sole proprietors and freelancers to businesses with up to 500 employees.
The money is intended to help businesses that have suffered massive revenue losses due to the outbreak, including restaurants across the country forced to close.
The loans are guaranteed by the Small Business Administration. They provide for deferred payments and offer the prospect of a rebate if the money is used to retain workers or rehire those who have been made redundant.
Businesses can borrow up to $ 10 million at an annual rate of 0.5% based on their salary costs as well as their expenses for rent, mortgage interest and utilities. They will need to provide documentation of those expenses, officials said.
All federally insured banks, credit unions, and agricultural credit system institutions will be able to provide the loans, not just institutions that are currently SBA lenders. The government will consider accepting non-bank lenders such as online companies as participants in the program. Most of the borrowers are expected to apply for the loans online.
Loans, under what is called the paycheck protection program, are a facet of the government’s assistance program. The SBA has started lending money under its Economic Disaster Lending Program and also offers bridging loans of up to $ 25,000 in loan with a quick turnaround time. Details on all coronavirus relief loans are available on the SBA website at www.sba.gov/coronavirus.
In addition, the Federal Reserve is planning a program of direct loans to small businesses. Details of this program were not disclosed.
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