Frequently asked questions about small business loans

The Coronavirus Aid, Relief and Economic Security (CARES) Act expands the Small Business Administration’s (SBA) 7(a) loan program to include nearly $350 billion for a small business program called the Payroll Protection Program.

The Payroll Protection Program (PPP) is not provided through SBA directly, so the first step to qualifying for a loan through the Payroll Protection Program is to find an SBA approved lender in your community. If your bank is not an SBA lender, you can contact the SBA at 1-877-475-2435 to find one; or visit the SBA website section on the 7(a) loan program. If you have trouble getting through to the national SBA office, this link will take you to your district office.

Who is eligible?

  • Small and medium sized businesses with fewer than 500 employees;
  • Nonprofits with fewer than 500 employees;
  • 501(c)(3) organizations (this is a tax-exempt designation conferred by the IRS based on the operations of the organization);
  • Sole proprietors;
  • Self-employed individuals; and
  • Independent contractors who typically receive 1099s.

How soon will the Payroll Protection Program be disbursing loans?
Secretary Steve Mnuchin said: “Treasury and the Small Business Administration expect to have this program up and running by April 3 so that businesses can go to a participating SBA 7(a) lender, bank, or credit union, apply for a loan, and be approved on the same day.”

What are allowable uses for Payroll Protection Program loans?

  • Payroll costs;
  • Certain costs related to the continuation of group health care benefits;
  • Employee salaries (including commissions);
  • Mortgage, rent and utilities payments; and
  • Interest on any other debt obligations that were incurred before the covered period.

Can Payroll Protection Program loans be turned essentially into grants?

Yes. A loan recipient may be eligible for forgiveness on a covered loan used for costs including up to eight weeks of payroll, mortgage and rent obligations, and utility payments. But there are specific requirements:

  • Every dollar a company spends on payroll, utilities, rent, or interest on mortgage debt during the eight-week covered period will be added together. That amount will be forgiven, up to the total amount your company borrowed through the program.
  • In order to ensure the loan amount will be forgiven, employers may not lay off any employees during the first eight weeks after they receive the loan.
  • Companies that reduce the salaries of workers who make less than $100,000 per year during this eight-week period by more than 25% will also have the forgivable amount of their loan reduced.

What’s the interest rate on Payroll Protection Program loans?

The maximum interest rate is 4%, but rates are reportedly much lower.

What size business loan do you qualify for?

  • The CARES Act allows businesses to take out loans equal to 2.5 times their average monthly payroll from 2019 with the total capped at $10 million. Payroll figures include salary and wages, health care benefits and paid sick leave.

How do I apply for a Payroll Protection Program loan?

  • This program is not provided through SBA directly, so the first step to qualifying for a 7(a) loan is to find an SBA approved lender in your community. Your lender can guide you through the application process and determine which 7(a) loan product will work best for your business.
  • For questions on finding a local SBA lender, contact your district SBA office, which can be found here. You can also contact the national SBA office at 1-877-475-2435 or email 7aquestions@sba.gov. If you are having trouble getting through to, or getting your questions answered by, the SBA, please submit this form, and NAHB staff will follow up and provide additional guidance as needed.

Read the entire PPP Interim Final Rule issued by SBA here (.pdf)

Source: National Association of Home Builders (NAHB).

Disclaimer: NAHB is providing this information for general information only. This information does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind nor should it be construed as such.

Resources for keeping your team and job sites safe

Resources for keeping your team and job sites safe

With an essential business designation comes a responsibility to help slow the spread of COVID-19 and protect your customers, employees and trade partners, and yourselves.

To help you clarify your position as an essential business, we have developed these resources:

NEW! CDC guidance for implementing safety practices if one of your employees is suspected of having COVID-19.

NEW! COVID-19 Safety Response Plan.  A sample plan you can implement in your business to keep your team safe.

NEW! Jobsite Safety Toolbox Talk.  Safety talking points for your meeting with your team.

Essential Worker Letter. Provide this letter to employees and trade partners who are performing work for you, particularly in the City of Greenville.

COVID-19 Job Site Sign. Post this sign at all of your job sites so that your employees and trades partners are reminded of safe workplace practices.

COVID-19 Business Resources. Visit this site for resources you can use in your business to weather the Coronavirus crisis.

Job Site Safety Resources. NAHB has published additional resources to help you keep your employees and trade partners safe on your job site.

Governor McMaster’s Work or Home order.

Homeland Security’s essential businesses guidance.

COVID-19 Safety Stand Aware
Join a unified, statewide effort to help educate our teams about the critical role safety and health plays during this global crisis.  Together, we can help flatten the curve and keep our teams safe.

As an industry, we have an obligation on our jobsites to ensure every individual understands the policies
and procedures to keep us safe during the COVID-19 crisis.

Please join a statewide Safety Stand Aware the week of April 13, 2020 to drive home the importance of job site safety.

Use the job site safety plan template and talking points linked above and hold a safety meeting with your entire team.

Governor and City of Greenville add additional social distancing rules

The City of Greenville also passed an emergency ordinance last week that sets safety standards for businesses that are authorized to remain open. These standards apply only in the City of Greenville:

Businesses permitted to operate in the City of Greenville must take the followings measures:

  1. Designate with signage, tape, or by other means at least six (6) feet spacing requirements for customers and employees in line to maintain appropriate distance.
  2. Have hand sanitizer or sanitizing products readily available for employees and customers.
  3. Implement separate operating hours for elderly and vulnerable customers.
  4. Provide an alternative means of purchasing and delivering products and services, to include online or telephone orders and curb-side or off-site deliveries provided, however, no business is required to implement an online ordering platform or provide direct delivery service where they do not currently offer such services.
  5. Make regular announcements or place signage reminding customers and employees of social distancing measures.
  6. Allow employees to wear protective masks and gloves.

The ordinance does waive the need to implement any of these actions if it creates an undue hardship on the business, which includes lack of availability of labor or materials.

Governor’s Social Distancing Standards
The Governor also ordered that businesses that remain open reduce the occupancy of their places of business. Businesses are ordered to not allow more than five people per 1,000 square feet of space or 20% of the occupancy approved by the Fire Marshal, whichever is less.

What Governor McMaster’s Home or Work order means to your business

Yesterday’s “Home or Work Order” from Governor McMaster provided a great deal of clarity on what constitutes an essential business or service during the state of emergency. It also is an example of the work that your Home Builders Association has been doing to insure that the housing industry is designated essential and ready to meet the needs of our community.

The order declares that all citizens stay home unless they are at work or traveling to work at a business that is essential. It also provides these exceptions:

  1. Caring for or visiting a family member (including travel).
  2. Obtaining necessary supplies and services for your family.
  3. Seeking medical care.
  4. Caring for pets (walking the dog is essential).
  5. Exercising and recreating outdoors (turkey hunting is essential).
  6. Attending religious services.
  7. Traveling as required by law (going to court is essential).

Violators are subject to a $100 fine, or 30 days in jail, per violation. Each day is a separate violation.

The order not only provides clarity for businesses that have been deemed nonessential, but critical to Home Builders and Remodelers, it clarifies what is deemed essential. Section 1, F, 2 of the Governor’s order states that businesses and services that have been deemed essential in the March 28 guidance from the US Department of Homeland Security are also essential in South Carolina. These sectors are deemed essential:

  1. Local and state government
  2. Healthcare
  3. Infrastructure like airlines, trucking, utilities, and telecommunications
  4. Manufacturing
  5. Retail like appliances, gas stations and convenience stores, grocery stores, and hardware and building material stores and suppliers
  6. Food and Agriculture
  7. Services including legal, accounting, and real estate
  8. Food banks and homeless shelters
  9. Construction and related businesses including engineering, planning, suppliers, and skilled trades
  10. Safety and sanitation services
  11. Logistics, technology, childcare, and other services essential to continuing operation of government
  12. Defense and law enforcement

Download the Governor’s Home or Work order is here.

Download Homeland Security’s essential services guidance is here.

Single-Family Market Grateful for Lower Rates

By NAHB Chief Economist Robert Dietz

The single-family housing market rebound continues, largely thanks to lower mortgage interest rates. The average 30-year fixed rate is currently 3.7% — whereas, just one year ago those rates were hovering around 4.8%. Although a 110-basis-point decline may seem small compared to rate changes of years past, home buyers have become significantly more sensitive to rates since the Great Recession.

Because of the lower cost of home buying, most housing metrics have improved in recent months. The NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the single-family market, climbed from a level of 60 a year ago to 70 this month. In October, single-family construction starts expanded by 2% to a 936,000 seasonally adjusted annual rate. Despite the slow start for 2019, single-family starts are down only 1% on a year-to-date basis and approaching flat conditions for 2019 as a whole. Permits for single-family homes have been expanding since April, and the pace of starts has been improving since May.

Though the NAHB Home Building Geography Index has reported relative strength in exurban and even some rural markets, custom home building in the third quarter was 6% higher than a year ago. The improvement for the single-family sector extends to the resale market as well. Existing home sales increased slightly in October and were up 5.4% from a year ago. Existing inventory declined to a 3.8-month supply, which caused resale price gains to accelerate.

While single-family conditions have improved over the last year, multifamily construction has been relatively flat. The NAHB Multifamily Production Index declined 7 points to a level of 49, slightly below the break-even threshold of 50. Multifamily starts have cooled since August and are currently registering just a slight gain for 2019 on a year-to-date basis. Quarterly data indicate that more than nine out of 10 apartments are built-for-rent, compared to the historical norm of eight out of 10.