Due to the ongoing coronavirus pandemic, the entire world has suffered emotionally and physically; however, the most significant downfall has struck the economy of countries worldwide due to long-term lockdowns and the need for people to self isolate in their homes and avoid any human contact. This situation has led to economic unrest amongst governments and has struck people, especially those with small businesses.
Businesses that could not survive under the economic load had to either shut down entirely or lay off staff members to sustain. This led to thousands of people being unemployed worldwide. It has been difficult for employers and employees who have either already lost their jobs or are living in constant fear of having to leave it. Moreover, inflation throughout the world is another aspect that is continually pulling businesses to the ground.
At a time of crisis, everyone hopes for a miracle that would keep their business running and their tables full; unfortunately, that doesn’t happen for many people. People consider taking loans and borrowing only to end up with more debts than usual. SBA has introduced an SBA Loan Forgiveness policy, which will now provide small businesses with loans and consider forgiving the loans if the companies adhere to all the rules that SBA has laid down.
At this time of pandemic and an ongoing global crisis, U.S Small Business Administration has laid out a Paycheck Protection program(PPP) that not only supports small businesses in their economic endeavors, but it also helps them keep their workforce employed during the Corona Virus crisis, therefore, it is a win-win situation not only for the employers but for the employees too! The SBA Loan Forgiveness is a policy introduced to facilitate small business owners and employees throughout the country who adhered to the Paycheck Protection Program’s policies.
The loans issued to owners will be forgiven if the loaned amount is entirely used upon maintaining or rehiring employees, interests on mortgages and rents, and utilities, which will help the business running, therefore maintaining a stable salary level for all the employees. We will expand on the policy and its details as we go along further.
What Happens If You Don’t Pay Back An SBA Loan?
Payment Protection Program has an interest rate of 1%, and no further fees are charged from small business owners. To apply for a loan, businesses also do not need collateral or personal guarantees, making it an effortless and secure process of application; however, you must be wondering about what happens if you Don’t pay back an SBA Loan?
Traditionally, if an SBA Loan is not paid back, the government or a lender can ask for reimbursements against that loan; however, with SBA Loan Forgiveness, an unpaid loan can be forgiven based on a few crucial conditions.
Can SBA Loans be forgiven?
With the SBA Loan Forgiveness policy, SBA Loans can now be forgiven given that the loaned amount is used in maintaining or rehiring the employees of a small business affected by the COVID 19 crisis. However, suppose there is a decline in the workforce or salaries and wages have been cut down due to the above. In that case, the forgiveness percentage on loan will be reduced so that the policy can be beneficial for as many small businesses as possible.
The Rules to be eligible for an SBA Loan Forgiveness policy
The SBA Loan Forgiveness policy has a few rules that the small business must adhere to to be eligible for forgiveness on their loans.
- Any Small business can apply for the loan forgiveness program that meets the SBA’s size standards.
- Sole proprietors, independent contractors, and self-employed persons can apply for loan forgiveness.
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) with more than one physical location and employs less than 500 per location can apply for the SBA loan forgiveness program.
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500 is eligible to apply as well.
SBA Loan Forgiveness Application Process; How to Apply?
The process of applying to SBA Loan Forgiveness is simple, secure, and user friendly so that it can be accessible to millions of people out there who need it. All you have to do is fill out an application form with our personal and business credentials and every essential information required for SBA to review your application’s authenticity so that you can benefit from the policy.
Each applicant must make sure that the application form is filled with authenticity and attention so that it adheres to the rules of application for the SBA loan forgiveness.
Why must you apply for an SBA Loan forgiveness for your small business?
It is that easy to get an SBA Loan Forgiveness of your Paycheck Protection Programme of the loan that you get! This policy will surely do wonders for people who are just looking for a miracle amid this pandemic so that they don’t have to shut down their businesses or cut down on the workforce because everyone needs to help others as much as they can at this time of crisis and SBA is here to do the same!
With the SBA loan forgiveness, small businesses will have revenue that they can generate to sustain themselves during this crisis and economic downfall. It will also help them retain their loyal customers and service providers without having to cut down on any of them.
As long as you adhere to the rules, nothing can stop you from running your business and catering to the people you love even amid a global pandemic and crisis!
Resources
- https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program
- https://www.sba.gov/sites/default/files/2020-05/3245-0407%20SBA%20Form%203508%20PPP%20Forgiveness%20Application.pdf
- https://www.journalofaccountancy.com/news/2020/jun/ppp-loan-recipients-can-apply-early-for-loan-forgiveness.html
- https://www.national.biz/sba-loan-default/#:~:text=Loss%20of%20Assets,properties%20to%20cover%20the%20debt.