It's by far the largest emergency aid package in U.S. history and includes the following key features: $250 billion for direct payments to individuals and families; $250 billion in unemployment insurance benefits; $500 billion in loans for distressed companies AND, most importantly for Mill Valley businesses, $350 billion in small business loans for businesses with less than 500 employees, i.e., every business in the 94941.
Although the $350 billion comes in the form of loans, which are guaranteed by federal government, they will function as grants under certain conditions. The debt will be forgiven if the funds are used for payroll costs, mortgage interest, rent and utility payments and if businesses retain employees.
Small Business Administration officials say a network of more than 800 lenders already approved to make SBA loans will extend the money to small business, with some choosing to hold the loans and others selling them on the secondary market.
A key component of the "Paycheck Protection Program," however, will be how quickly it can get up and running. The Small Business Administration, which is in charge of the program, distributed $28 billion in fiscal year 2019 and is in charge of the program, and now it must dramatically ramp up quickly enough to implement a $350 billion plan to rampant small business closures here and around the country.
The loans, which are guaranteed by federal government, will function as grants under certain conditions. The debt will be forgiven if the funds are used for payroll costs, mortgage interest, rent and utility payments, if businesses retain employees and all employees receive at least 75% of their prior pay. Companies can rehire employees in coming weeks without penalty. For businesses that reduce their headcount or reduce wages more than 25%, the amount of the loan forgiven will be reduced in proportion to payroll cuts, but the companies can rehire employees in coming weeks without penalty.
The small business loans will be 2.5 times monthly payroll costs, although some groups in the travel and restaurant industries had sought four times operating costs. The loans come with a rate of 4 percent or below, and the maximum loan amount is $10 million.
More details on how to apply through the "Paycheck Protection Program" will be available once the rescue package is officially passed. We'll update you as soon as we can.