SBA Relief Loans can be used
Congress passed another stimulus package, which includes the next wave of Paycheck Protection Program (PPP) loans. At Upwise Capital we are eager to participate in PPP Round 3 for 2021 and continue our mission of helping small businesses. Read below what we know about the new program guidelines for second draw PPP loans and potential changes to loan forgiveness. Use our expedited application process, by clicking the link below.
- The $900 billion COVID-19 aid bill includes a $284 billion allocation for Initial and “Second Draw” PPP loans.
- Small businesses that received an Initial PPP loan may qualify for a Second PPP loan (Second Draw).
- To be eligible to apply for a Second Draw PPP loan, entities must employ 300 or fewer employees and must have used (or will use) the full amount of their first PPP loan prior to applying for a Second Draw.
- Eligible businesses must also demonstrate at least a 25% reduction in gross receipts in the first, second, third, or fourth quarter of 2020 relative to the same quarter from 2019.
- A business that was not in operation on February 15, 2020 is not eligible for an Initial PPP loan or a Second Draw PPP loan.
- The new PPP legislation includes changes to forgiveness—including a simplified forgiveness process for borrowers with loans under $150,000—and expanded expenses that are eligible for forgiveness.
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What is an SBA Relief Loan?
A historic $2 trillion economic relief package has been passed and signed into law by President Trump in response to the economic crisis caused by the coronavirus pandemic (COVID-19). This includes $367 Billion in low interest loans for small businesses.
The following coronavirus (COVID-19) SBA relief loans are available:
Paycheck Protection Program (PPP)
The PPP is a loan designed to provide direct incentive for small businesses to keep their workers on payroll.
SBA Express Disaster Bridge Loan (EBL)
The SBA Express Bridge Loan allows small businesses affected by coronavirus to access up to $25,000 with less paperwork.
Economic Injury Disaster Loan (EIDL)
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million.
SBA 7(a)
Relief Loan
The SBA 7(a) Loan can help businesses respond to opportunities and challenges associated with COVID-19.
PPP: 2.5X Payroll, Rent, Utilities
SBA EBL: $25K
EIDL: $2M
SBA 7(a): $5M
PPP: Up to 2 Years
SBA EBL: Up to 7 Years
EIDL: Up to 30 Years
SBA 7(a): 5-30 Years
PPP: 1% - Forgivable
SBA EBL: Prime + Up to 6.5%
EIDL: 3.75% / 2.75% non-profits
SBA 7(a): Starting at 6.75%
PPP: None
SBA EBL: None
EIDL: None under $200K
SBA 7(a): May require collateral
PROS
- Long Payment Terms
- Forgivable & Low Interest Rates
- Suitable for a wide range of business purposes
- Debt Forgiveness Programs if already have an SBA
CONS
- May Require Personal Guarantee or Collateral
- SBA Banks Will Be Overwhelmed with Applications
- SBA Credit Criteria Must Be Met
- Funding Speed Depends on SBA Bank or Lender
The Paycheck Protection Plan (PPP) will forgive the debt used for payroll costs, mortgage interest, rent and utility payments!
More Information on each SBA Relief loan below
Paycheck Protection Program (PPP)
Program Overview
The Paycheck Protection Program is a loan designed to provide a way for small businesses owners to re-hire and to keep their workers on payroll, as well as have working capital to cover utility and rent related expenses.
SBA will forgive loans if all employees are kept on the payroll for eight to twenty-four weeks and the money is used for payroll, rent, mortgage interest, utilities, or other expenses.
Who Can Apply
The requirements are very simple.
- Your business or non-profit must have been in operation as of February 15, 2020.
- Publicly traded companies are no longer eligible to apply.
For first time PPP recipients:
- You must be a small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
For a “Second Draw” PPP Loan:
- You must be a small business with less than 300 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
- You must show a 25% reduction in revenue in any quarter of 2020 in comparison to the same quarter from 2019
- Entities must have used (or will use) the full amount of their first PPP loan prior to applying for a Second Draw
Businesses in certain industries may have more than 300 employees if they meet the SBA’s size standards for those industries. For first time “initial” PPP loans, the number or employees are capped at 500.
Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 300 workers. This means each store location could be eligible.
How to Apply
You can apply through Upwise Capital and it’s SBA Approved & Trusted Lenders. Apply Now – Click Here.
The SBA will begin processing loan applications in early January 2021.
Loan Use
- Payroll Costs: Salaries, Wages, Commissions, Cash Tip Payments (or similar compensation)
- Mortgage: Interest payments on your Mortgage bill (not mortgage principal)
- Rent
- Utilities: Electric, Gas + Heat, Cable + Internet
- Healthcare: Any costs that are related to continuing a groups healthcare benefits, including insurance premiums
- Interest on any other debt related obligations sustained before February 15, 2020
Additional eligible expenses have been included in this iteration of PPP Second Draw and PPP Round 3 (PPPr3):
- Certain operation expenditures including business software and cloud computing products and services; the tracking and processing of payroll expenses; costs related to human resources, sales, and billing; or the tracking and accounting of records, expenses, supplies, and inventory
- Property damage related to public disturbances not otherwise covered by insurance or any other form of compensation
- Expenses related to protecting workers such as PPE purchases or modifications/renovations made to comply with federal, state, or local guidance issued in relation to the pandemic.
- Costs owed to suppliers for essential goods purchased prior to receiving your latest PPP loan or perishable goods purchased before or during the “covered period” of the loan.
- The “PPP covered period” is determined by the borrower and must be between 8 and 24 weeks of receiving the PPP loan.
Loan Details
PPP Deductible Expenses
PPP Loan Forgiveness
The PPP Round 3 (PPPr3) is eligible to be fully forgiven if the funds are used correctly.
This means if the funds are used for payroll costs (listed above), interest on mortgage payments (not principal), rent, and utilities.
For PPP loans distributed in round 3 to be forgiven, 60% of proceeds must be used towards payroll. As in round 1, rent and utilities are also eligible expenses. Additional eligible expenses have been included in this iteration of PPP (see above).
There is also a new, simplified process for the forgiveness of loans $150,000 and under. The SBA currently has until January 20, 2021 to provide a one-page certification form to be completed by the borrower at any time before the loan matures. It is recommended to complete the form within 10 months after the covered period of your loan ends because that is when monthly payments begin on any PPP funds that are not forgiven.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
To apply for loan forgiveness, a borrower must submit certified documents from a representative of the business to verify payments used for payroll (number of employees, pay rates, including IRS payroll tax filings and state income, payroll, and unemployment insurance filings) and expenses (mortgage interest, rent and utilities).
If you wish to begin preparing your application, you can click the link below to start the application or reach out to one of our funding advisors at (646) 837-5522 or email [email protected]
Economic Injury Disaster Loan (EIDL)
Program Overview
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan (EIDL). These loans offer working capital support to help businesses stay operational during this economic disaster. While typically known for long wait times and strict qualifications and guidelines to get approved, this has changed with the response to the CARES Act and Coronavirus (COVID-19) situation.
Who Can Apply
To apply for an EIDL, you must prove substantial economic injury caused by COVID-19. If your business was experiencing financial problems before the Coronavirus pandemic, you may not qualify.
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
Not-for-profits organizations (except those receiving Medicaid funds) and Veterans organizations are also eligible to apply.
**NOTICE: New eligibility is made possible as a result of the latest round of funds appropriated by Congress in response to the COVID-19 pandemic.
- Agricultural businesses includes those businesses engaged in the production of food and fiber, ranching, and raising of livestock, aquaculture, and all other farming and agricultural related industries (as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)).
- SBA is encouraging all eligible agricultural businesses with 500 or fewer employees wishing to apply to begin preparing their business financial information needed for their application.
At this time, only agricultural business applications will be accepted due to limitations in funding availability and the unprecedented submission of applications already received. Applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis. For agricultural businesses that submitted an EIDL application through the streamlined application portal prior to the legislative change, SBA will process these applications without the need for re-applying.
How to Apply
You can apply through Upwise Capital and it’s SBA Approved & Trusted Lenders.
In order for you to qualify for the SBA Economic Injury Disaster Loan, you just need to fill out the application below and we will send you an email with additional questions.
Loan Use
The EIDL loan can be used for a number of purposes to cover necessary day to day operations and expenses, before the disaster affected your finances. Below is a list of example uses:
- Payroll + Hire Employees
- Accounts Payable
- Sick Leave for employees
- Increased Costs for Materials or Goods
- Rent or Mortgages Payments
- Other debt payments that cannot be met due to revenue loss
Loan Details
Interest Rates for small businesses are 3.75% and for non profits 2.75%If you need quick funds, you are eligible to apply for SBA EIDL
Emergency Advance of up to $10,000.00
Loan Forgiveness
This EIDL Emergency Advance will be forgiven and convert to a grant. The EIDL Loan must be paid to maturity.
If you wish to begin preparing your Economic Injury Disaster Loan (EIDL) application, you can click the link below to start the application or reach out to one of our funding advisors at (646) 837-5522 or email [email protected] to get started.
SBA 7(a) Loan & Debt Relief
Program Overview
The SBA’s 7(a) program offers loan amounts up to $5,000,000 and is an all-inclusive loan program deployed by lending partners for eligible small businesses within the U.S. States and its territories. The uses of proceeds include: working capital; expansion/renovation; new construction; purchase of land or buildings; purchase of equipment, fixtures; lease-hold improvements; refinancing debt for compelling reasons; seasonal line of credit; inventory; or starting a business.
These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing from conronavirus (COVID-19).
Who Can Apply
You must be officially registered a for-profit and your business must have fewer than 500 employees, and less than $7.5 million revenue on average each year for the past three years.
The small business must have been operational when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements.
How to Apply
You can apply through Upwise Capital and it’s SBA Approved & Trusted Lenders.
In order for you to qualify for the SBA 7(a) Loan – you would need to submit SBA Form 1919 and SBA Form 1920 – along with the necessary business information, such as bank statements, tax returns, financials, debt schedule, etc.
Loan Details and Forgiveness
The SBA 7(a) Loan is structured as a term loan or revolving line of credit.
Terms from 5-30 years. The 7(a) Loan interest rate can be as low as 6.75%.
Under this program:
- The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020.
- The SBA will pay the principal and interest of current 7(a) loans for a period of six months.
If you wish to begin preparing your SBA 7(a) Loan Application, you can click the link below to start the application or reach out to one of our funding advisors at (646) 837-5522 or email [email protected]
Do not worry, Upwise capital has secured many SBA 7(a) Loans for clients in the past and can easily navigate your business through the SBA Disaster Relief Loan process to a successful funded SBA Relief Loan.
SBA Express Bridge Loan (EBL) Pilot Program
Program Overview
Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.
Who Can Apply
For Presidential Disaster Declarations, small businesses that were located, as of the date of the applicable disaster, in Primary Counties that were declared disaster areas under the Presidential Disaster Declaration or in any Contiguous Counties; or for the COVID-19 Emergency Declaration, small businesses located in any state, territory and the District of Columbia that have been adversely impacted by the COVID19 emergency.
The small business must have been operational when the declared disaster commenced and must meet all other 7(a) loan eligibility requirements.
How to Apply
You can apply through Upwise Capital and it’s SBA Approved & Trusted Lenders.
In order for you to qualify for the SBA Express Bridge Loan, you would just need to verify credit scores (SBSS Score and Personal Credit Score), IRS Tax Returns or Transcript, Existing Banking Relationship/Bank Statements.
The SBA will begin processing EBL loan applications now!
Loan Details and Forgiveness
The EBL Loan is structured as a term loan (revolving lines of credit are not permitted). Terms up to 7 years. The EBL Loan may have a fixed or variable interest rate up to 6.75% + Prime Interest Rate.
The Lender may require the EBL borrower to pay the EBL loan in part or in full if the borrower is approved for long-term disaster financing (including an SBA Direct Disaster loan) that allows loan proceeds to be used for EBL loan reimbursement.
The Lender may permit the loan to amortize over a maximum term of 7 years if the borrower does not obtain long-term disaster financing.
If you wish to begin preparing your application, you can click the link below to start the application or reach out to one of our funding advisors at (646) 837-5522 or email [email protected]
Do not worry, Upwise capital has secured many SBA Express loans for clients in the past and can easily navigate your business through the SBA Disaster Relief Loan process to a successful funded SBA Relief Loan.
Documents Needed to Apply
Debt Schedule
2 years of Personal and Business Tax Returns 2017 to 2018 – if applicable
2019/YTD 2020 Profit & Loss and Balance Sheet – if applicable
6 Month of your most recent business bank statements
Aging Account Receivables and Payables report – if applicable
Personal Financial Statement – ALL owners
Driver’s License(s) of all owners (Front & Back
be Prepared
Documents Required for an SBA RELIEF
LOANS
The best strategy to follow before you apply for the SBA Disaster Relief Loans is to be prepared. The more readily available your documentation is, the faster you’ll move through the process.
The following is a checklist of the most commonly collected documents. It can be very helpful to work with your accountant or tax preparer to gather some of the financial documentation.
We require a completed and signed:
EIDL: SBA EIDL Loan Application (SBA Form 5) +
SBA EIDL Supporting Doc
EBL: SBA Express EBL Loan Application
PPP: SBA PPP Loan Application
7(A): SBA 7(a) Loan Application
We require a completed and signed Personal Financial Statement (SBA Form 413).
We require a completed and signed Schedule of Liabilities (SBA Form 2202).
We require a completed and signed Request for Transcript for Tax Return Form (IRS Form 4506T).
Upwise requires complete copies of the most recent Federal Income Tax Return
Also known as an “Income Statement,” a Profit and Loss Statement measures a company's financial performance over a specific period of time. This statement includes all revenue and expenses over a given period.
This statement provides an overall financial snapshot of your small business. As an equation, it looks like: Assets = Liabilities + Equity. The two sides of the equation must balance out to equal each other.
To ensure all of your information is correct on the contracts, we require a clear copy of you DL & VC to verify this information.
What does this Aid Bill mean for Small Business?
For many small business owners this relief could not come fast enough. The SBA has never been tasked with disaster relief of this scope, so EIDL Loan guarantees will be distributed through the 7(a) loan program.
At Upwise Capital, we have many years of experience working with trusted + approved SBA Lenders in which our funding advisors are trained to walk you through every step of the way. We handle all the paperwork and filing on your behalf, so you can get back to the more important things, like running your business.
We advise business owners to take advantage of ALL of the SBA Relief Programs available:
The PPP will cover your Payroll & Overhead Expenses – and if used correctly – will be forgiven – meaning you do not have to pay it back. This is a no brainer – Thanks U.S. Government!
The EBL can get you up to $25K to act as a bridge loan while applying and waiting for the EIDL to go through, which could take some time, considering how flooded the SBA is right now, so get your application in now – for this one.
EIDL can get you up to $2M at the cheapest interest rate but will be the hardest to get approved for.
The SBA 7(a) is always the gold standard of business loans and is offering a Disaster Relief Program!
Business owners should know that they can get a traditional SBA 7(a) Loan for business growth and expansion alongside an EIDL Loan, which may have interest forgiveness in the future.
It also appears that small businesses will be able to defer their payroll taxes until 2021 or 2022. A separate program will provide $17 billion to pay the principal, interest, and fees on outstanding SBA loans temporarily. There are roughly $100 Billion of these SBA Loans Outstanding. If you have an SBA Loan call your SBA lender or Upwise advisor today @ (646) 837-5522.
Types of SBA Loans
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