SBA to Start Taking Loan Applications April 3
The following is submitted by Art Rhodes, president and CEO of the Church of God Benefits Board, as a follow up to an earlier article concerning the availability and process of SBA loans for local churches:
Under intense pressure from the White House, Congress, and small business organizations to move quickly, the Small Business Administration has released an application and preliminary information on the new loan program provided for under the CARES Act. The process seems to be overly simplified, compared to previous SBA loan programs, thus following the recommendation of President Trump.
While the information contained in the initial SBA documents do not specifically align with the wording contained in the legislation, the new documentation does provide insight as to the process that the Small Business Administration will use in determining eligibility for these new loans. For example, while the legislation provides that the “loan shall have a maximum maturity of 10 years,” the SBA’s initial documents provide for only a two-year loan period. On the other hand, the legislation provides for an interest rate “not to exceed 4 percent,” but the SBA documents peg the interest rate at 0.50%.
Further, the application that is available here (and also available on the SBA website at https://home.treasury.gov/cares under “Assistance for Small Businesses”) for these “payment protection“ SBA loans has to be filed with the borrower’s local lender/bank, not with the SBA.
It is also important to remember that the SBA has another loan program, called the Economic Injury Disaster Loan (EIDL) program. Although historically churches have not been eligible for the EIDL loans (loans made directly by the SBA), the SBA seems to be applying the CARES Act guidelines to those loans as well and allowing churches to apply. It is important to remember that there is no forgiveness program under the EIDL loan program. The forgiveness provision is only under the “paycheck protection“ loans for which the application is attached here.
As has been noted previously, the rules and regulations seem to be changing daily and the information provided here could change once the church/borrower has conversations with their local SBA designated bank.
Finally, please note that the SBA has now stated that banks will start taking applications for these loans by April 3, a week ahead of their previous projection.
