Small business loan assistance possible

The new federal stimulus law, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), includes provisions to help provide small businesses with loans. Eligible recipients include small businesses, as well as sole proprietors, self-employed individuals and independent contractors.

These programs become active on Friday, April 3, 2020.

Psychologists suffering financial hardship due to the pandemic may consider one of the programs that were created as part of this stimulus package.

For most psychologists, the application process happens through your bank as explained below. The process may take a few hours.

With unemployment claims soaring, this funding is intended to keep workers on the payroll. The loan has a maturity of two years and a 1% interest rate. Payment is deferred for six months. 

The loan will be forgiven, however, if the money is used for payroll costs, mortgage interest, rent and utilities, and if employees are kept on the payroll for eight weeks. Forgiveness requires maintaining employee and salary levels and may be reduced if either decrease.

Loans can be up to 2.5 times the applicant’s monthly payroll costs but cannot exceed $10 million. Compensation to an individual employee, sole proprietor, independent contractor and self-employed individuals is limited to $100,000 in one year. The program will be available through June 30.

This program provides eligible recipients with up to $2 million to help overcome temporary loss of revenue. Additionally, a $10,000 advance will be made available within three days of a successful application. The advance will not have to be repaid.

This loan is for small businesses with an existing relationship with an SBA Express Lender. This loan allows those small businesses to access up to $25,000 quickly, to help overcome temporary loss of revenue.

This is an option for a small business in urgent need for cash while waiting for a decision on the Economic Injury Disaster Loan.

This program provides immediate relief to small businesses with nondisaster Small Business Assistance (SBA) loans, such as 7(a), 504 and microloans. The SBA will cover all loan payments, including principal and interest, for six months for loans issued prior to Sept. 27, 2020. Note that interest will continue to accrue during this deferral period.

Most of these loans require using an SBA-endorsed local bank, so please check your local bank for details. If your bank is not on the SBA list, you can check the SBA sites for more guidance.

Beyond the SBA loan program, the CARES Act includes incentives for telehealth and other programs that may benefit mental health providers. They include:

• The Veterans Affairs Department’s expansion of telemental health coverage for veterans.
• Up to $425 million for the Substance Abuse and Mental Health Services Administration, including $250 million to Certified Community Behavioral Health Clinics. There’s another $50 million for suicide prevention.