VAN WERT – Van Wert Area Economic Development Director Stacy Adam is urging small businesses to apply for the small business relief loan that was passed in the stimulus bill by the federal government on Friday. The loans are aimed at helping small businesses suffering losses from the coronavirus pandemic.

“Included in this Phase 3 legislation is Small Business Administration 7(a) loans,” said Adam who noted the program is called The Coronavirus Aid, Relief, and Economic Security Act (CARES Act). “There is a Paycheck Protection Program in there that would allow business owners to use the loan for payroll, utilities, rent, and healthcare insurance. The portion of the loan that is used for those things will be forgiven.”

The CARES Act authorizes $349 billion of federally guaranteed loans to qualified small and medium-sized businesses. Businesses will be able to borrow 2.5 times the monthly payroll costs or a maximum of $10 million. The loan can be used for things like payroll costs, group health costs, insurance premiums, and utilities.

Payments can be deferred by up to a year, but businesses who borrow will be eligible for loan forgiveness dependent on the amount spent by the borrower during an 8-week period after loan closing. Any amount not forgiven could have a maximum interest rate of 4 percent. Loan forgiveness will not be taxable income.

The amount eligible for forgiveness is reduced proportionally by a reduction in employees retained compared to the prior year and by a reduction in pay of any employee in excess of 25 percent.

Businesses, 501 (c)(3) non-profits or veteran’s organizations with 500 or fewer employees are eligible for the loans. Eligibility also includes certain sole-proprietors, independent contractors, and other self-employed individuals. The 500 employees limit is waived for accommodation and food service businesses so long as the business employs no more than 500 employees at any physical location.

Ineligible businesses include financial, passive, foreign, gambling, and religious businesses, private clubs, and life insurance.

Businesses are encouraged to reach out to banks who work with the SBA. Locally, according to Adam, US Bank, Citizens Bank and First Financial Bank work with the SBA and are assisting with loans.

Disaster loans are available through the SBA. Businesses can apply here