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COVID-19 Small Business Relief (CARES Act)
At BayCoast Bank, we care about our Small Business and Commercial clients and are committed to helping businesses navigate these challenging times.
As a long-standing partner with SBA programs, we have been closely following the SBA and its lending programs for use in COVID-19 relief.
Our experienced team of lenders are well-versed in SBA loan programs and are dedicated to providing your business access to these programs.
Here’s what you should know.
On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This Act created the Paycheck Protection Program, a forgivable loan program designed to provide businesses with relief from the financial impacts of the COVID-19 crisis.
PLEASE NOTE: We are now accepting applications from BayCoast Bank Small Business customers and businesses without an existing relationship within our market area.
Here are the particulars of the loan program:
• Offered to small businesses with fewer than 500 employees, select types of business with fewer than 1,500 employees, 501(c)(3) non-profits with fewer than 500 workers and some 501(C)(19) veteran organizations, all business types need to have been in operation prior to February 15, 2020.
• Self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply (again, you have to be in operation before February 15, 2020).
• Loans are given up to a maximum of the lesser of $10 million, or 2.5 times the average monthly payroll costs – including wages for employees making under $100,000, as well as expenses for paid sick leave, healthcare and other benefits - during the 1-year period before the date on which the loan was made.
• Loans bear an interest rate of 1% per year.
• Loans originated after June 5, 2020 have a five (5) year term.
• No personal guarantee or collateral is required for the loan.
• You can only apply for this program one time – multiple applications aren’t permitted.
• For loans originated after June 5, 2020, payments will be deferred until the SBA sends the forgiveness amount to BayCoast following the borrower's forgiveness application. For borrowers who do not apply for forgiveness, the deferral process lasts for 10 months after the end of the covered period (as described in the loan agreement).
• Loans are eligible for forgiveness based on the borrower's compliance with the terms of the PPP program.
Loans are eligible for forgiveness when the proceeds are used for any of these costs, subject to the terms of the PPP program as established by the SBA:
• Payroll costs, excluding prorated amounts for individuals with compensation greater than $100,000.
• Rent, pursuant to a lease in force before February 15, 2020.
• Utility expenses for services which began before February 15, 2020.
• Mortgage interest expenses for a building owned and used by the business.
A word of caution… the extent of your forgiveness eligibility may be reduced if you have recently laid off any full time workers, or reduced the pay of any other workers. The US Chamber of Commerce offers a step-by-step calculation here.
It is the responsibility of the borrower to carefully document the use of the proceeds of the loan for the covered period starting when the loan is originated. You may want to segregate the funds in a separate account, and you should keep detailed payroll records and copies of any checks or other payment receipts for payment of utilities, rent and mortgage interest.
Please understand that BayCoast Bank has assembled this information and documentation based upon the best information available to the Bank during this quickly changing and challenging time. As such, the application and supporting documentation requirements are subject to change, and the loan application and approval process is further subject to SBA rules and regulations once promulgated.
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