“Small Business” Loan Types
Historically, the Small Business Administration (the “SBA”) has offered 7(a) Business Loans and 7(b) Disaster Loans. After the passage of the CARES Act on Friday, March 27, 2020, these two loan programs became temporarily amended to provide easier barriers of entry.
While FAQs and an Interim Final Rule have been released, there is still much that awaits further clarification. Though on April 16, 2020, funding for the two loan programs had run up, additional funding is expected. As such, it is important to familiarize oneself with the various nuances of the two programs to determine eligibility. Thus far, this is what we know about the two loan programs:
Main Street Lending Programs
On April 9, 2020
, the Federal Reserve, published term sheets for a Main Street Lending Program for small and/or mid-size businesses. There are actually two separate loan programs under the Main Street Lending Program—the Main Street Lending Program and
the Main Street Expanded Lending Program
On April 30, 2020, after receiving and reviewing public input, the Federal Reserve made adjustments to the Main Street Lending Program and Main Street Expanded Lending Program and added a third loan option (though the Federal Reserve will only purchase 85% of this loan).
The proposed terms of the programs are similar (aside from the loan amount and the collateral required) and are outlined below:
If you have questions about your business, its eligibility to participate in any of the loan programs, or another issue concerning business operations and available financial programs, please do not hesitate to contact the lawyers at Capes Sokol.