When you want to apply for an SBA loan, you must do so by going through a bank or credit union. Then, the bank or credit union applies to the SBA for a loan on your behalf. This application process is intended to obtain a loan guarantee, meaning if you end up defaulting on an SBA loan you’re approved for, then the government will pay the lender the guaranteed amount on your behalf.
You may have been one of the businesses that pounced on the hastily assembled Paycheck Protection Program in hopes of getting a loan. Many businesses succeeded, but some did not, and it's not always clear why. If you didn't, here are some clues why.
One of the most significant features of the SBA's Paycheck Protection Program is the forgiveness provision—the loans become grants for companies that use the loans to maintain their workforce levels. Companies that have met the stringent requirements need to fill out a form and follow instructions carefully—they include several measures to reduce compliance burdens and simplify the process for borrowers, including:
Like most new government programs, the PPP has been followed by a stream of clarifying guidance from the relevant federal agencies. Whether you have such loans already or are seeking to get them, you should be aware of the details.
Among the many relief provisions passed by Congress in recent days are loans focused on small businesses. This isn't entirely new to the SBA, which has long been in the loan business, but recently passed laws supercharged the offerings. As with so many government programs, however, the devil is in the details. Below are some specifics, and you should review the details carefully before proceeding.
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