Quote:
Originally Posted by Dan9871
Has your friend tried applying for an SBA loan?
The legislation does not require landlords to forgive or defer rent, but the loan can be used for rent and utilities and then forgiven if the the employees are paid.
The SBA loan does not forgive mortgage principal payments made with the loan but it does forgive the interest on those payments. So at the end of the SBA loan forgiveness period (6 months at the moment) he will be paying back the principle amount to the SBA at a rate that is probably lower than his mortgage rate.
In effect he skips paying any interest and defers paying off the principle but at a lower rate then his mortgage.
Seems like a good deal but, of course, but the devil is in the details so he really should check with a bank about getting the SBA loan.
Paycheck Protection Program
"The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
This loan has a maturity of 2 years and an interest rate of 1%.
If you wish to begin preparing your application, you can download a copy of the PPP borrower application form to see the information that will be requested from you when you apply with a lender." |
Yes, she got a $10,000 loan, but all but one of her employees, who are young, quit. And, most of her customers have cancelled their regular accounts. She has had a successful fitness business for 15 years, but her rent is about $5,500 per month. So, I think it will be very hard to maintain the business. I don't see how the stimulus bill comes close to making her whole.