Salt Lake City, UT (April 2, 2020) – Utah lenders announced today that they stand ready to approve U.S. Small Business Administration-backed loans thanks to the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act during the bi-weekly virtual Town Hall for the Utah Economic Response Task Force. The CARES Act legislation is designed to help small business owners cover their payroll and other basic business expenses.
“As our task force works to support our economy, businesses, employees and families through the pandemic, implementation of the CARES Act contributes immensely to a foundation for success,” said Derek Miller, president of the Salt Lake Chamber and chair of the Utah Economic Response Task Force. “Unprecedented in its scope and coverage, it provides an economic lifeline to help protect paychecks, save small businesses, and support the health of Utah’s economy as we move forward.”
The CARES Act offers qualified borrowers the ability to receive financial support in the form of loans that will later be forgiven for portions that are used for payroll, mortgage interest, rent or utilities when certain conditions — such as retaining employees — are met.
Scott Anderson, president and CEO of Zions Bank, said, “The Paycheck Protection Program from the CARES Act reinforces the fact that small businesses are integral to our economies as employers and engines for economic growth. They are the backbone of Main Street, and the injection these loans will provide businesses during these difficult times will help protect paychecks and stability for workers and employers, as well as soften the economic impact of the coronavirus. Utah’s financial institutions are proud to work with the SBA to administer and process these loans in a quick and efficient manner.”
The loan program is available to all businesses — including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors — with 500 or fewer employees. Others eligible may include certain industries with more than 500 employees if they meet the SBA’s size standards, and small businesses in the hospitality and food industry with more than one location but fewer than 500 workers at the store and location level. The program is funded by $350 billion during the “covered period,” which runs from February 15, 2020 through June 30, 2020.
“The SBA designed the Paycheck Protection Program so that borrowers can go straight to their financial institutions, rather than directly to the SBA, so that loan funding can be expedited,” said Howard Headlee, president of the Utah Bankers Association. “Utah’s financial institutions are eager to help our local small businesses by helping to quickly approve and process these loans.”
The loans were designed to help entrepreneurs retain staff, and they may be eligible for forgiveness, provided certain conditions met. For example, at least 75% of the forgiven amount must have been used for payroll.
“Because we anticipate that loans will be funded quickly and in high demand, we encourage small business owners to organize the documents they need to apply for the loans now,” said Scott Simpson, president and CEO of the Utah Association of Credit Unions. “Act quickly to gather payroll documentation for 2019 or, for newer businesses, for the last 90 days. These documents should include salary, wages, commissions, tips and benefits for full-time, part-time, and workers of any other status.”
More information about loan details and forgiveness are available on the SBA’s website.
SBA Paycheck Protection Loans
Small businesses, nonprofits, independent contractors and the self-employed may apply for the SBA’s new Paycheck Protection Program, which covers most basic business expenses permitted under the 7(a) loan program. The two-year term loans have a fixed rate of 1.0%. The unsecured loans do not require collateral or personal guarantees by the borrower. No borrower or lender fees are payable to SBA. The maximum loan amount is $10 million or two-and-a-half times the business’s average monthly payroll costs. Additional documentation may be required for new and seasonal businesses. No servicing fees are required, and the first payment may be deferred for six months.
The SBA has announced that starting April 3, 2020, small businesses and sole proprietorships can apply for loans through the Paycheck Protection Program. Utah banks and credit unions will be ready to accept applications (pending the SBA’s final application details). In line with SBA guidelines, financial institutions will begin to accept applications from independent contractors and self-employed individuals starting April 10, 2020.
ABOUT THE UTAH ECONOMIC RESPONSE TASK FORCE
The Utah Economic Response Task Force was established by Governor Herbert to help prevent and mitigate the economic impacts of the coronavirus. Derek Miller, president and CEO of the Salt Lake Chamber, serves as the chair of the task force.