The Cares Act 3.5 was signed into law on 4/24/20 to support small businesses adding $60 billion to the EIDL.
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CAI's Guide to Small Business Administration (SBA) EIDL ***
The Federal government’s SBA Economic Injury Disaster Loan (EIDL) provides long-term, low-interest loans to stabilize nonprofit organizations (community associations) and small businesses experiencing a substantial economic injury as a result of the COVID-19 national emergency. The EIDL is used for working capital necessary until normal operations are resumed.
EIDLs may not fund expenses like payment of dividends and bonuses, expansions of facilities, retiring federal debt (except IRS obligations), or relocation expenses.
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Community associations reporting payment information to credit bureaus (Experian, TransUnion, Equifax) are required to report accounts as current if the association offers an owner a flexible assessment payment plan (an accommodation) during the COVID-19 national emergency.
The CARES Act defines an “accommodation" as a payment deferral, allowing partial payments, delinquency forgiveness, or other delinquency workout. If an association offers an assessment accommodation for homeowners, the association must report homeowner accounts as current.
If a homeowner had a delinquency prior to January 1, 2020, that portion of the owner's assessment obligation may continue to be reported as delinquent. If the owner brings a pre-January 1, 2020, delinquent account current and receives an assessment accommodation from the association, the association must report the account as current.
The CARES Act allows any homeowner experiencing a financial hardship due to the COVID-19 national emergency to request up to 60 days mortgage loan forbearance. A homeowner may request mortgage forbearance even if the mortgage is current—there is no requirement a borrower miss mortgage payments to qualify for mortgage forbearance.
Borrowers may request up to 4 additional 30-day extensions of mortgage forbearance, but the requests must be made prior to December 31, 2020, or the termination of President Trump's national emergency declaration, whichever occurs sooner.
During a forbearance period, lenders may not report negative credit information to credit bureaus and only fees and interest that would have come due if the account were current are permitted to accrue to the borrower's account.
The national mortgage forbearance applies to federally backed mortgages, which include mortgages—
The CARES Act imposes a nationwide foreclosure moratorium for federally backed mortgages. Approximately 65% of mortgages nationwide are considered federally backed mortgages.
The foreclosure moratorium expires December 31, 2020, or when President Trump terminates the COVID-19 national emergency declaration, whichever occurs sooner.
The CARES Act does not impose a moratorium on community association foreclosures. Please refer to CAI's statement on community association foreclosures during the COVID-19 national emergency.
State and local government are imposing foreclosure moratoria. For more information on state government emergency declarations and mortgage foreclosure moratoria, visit CAI's State Government COVID-19 emergency action information clearinghouse.
The national government response to the COVID-19 pandemic relies on individuals and households sheltering in place and practicing social distancing. The CARES Act national eviction moratorium supports this policy.
The CARES Act national eviction moratorium is intentionally broad and applies to—
For the 120-day period following enactment of the CARES Act, no lessor may petition a court to recover possession of a dwelling due to nonpayment of rent, fees, or other charges. Lessors may not assess monetary penalties for nonpayment of rent during the eviction moratorium.
Following expiration of the 120-day moratorium, lessors may petition to recover possession of a dwelling. Lessors may not deliver a notice to vacate to tenants during the 120-day moratorium and are required to give tenants no less than 30 days to vacate the dwelling.
The Cares Act 3.5 was signed into law on 4/24/20 to support small businesses adding $349 billion to the PPP.
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CAI's Paycheck Protection Program (PPP) Guide (As of April 3, 2020) ***
The Paycheck Protection Program (PPP) is a $349 billion loan and grant program administered through the Small Business Administration 7(a) program to help small businesses and nonprofit organizations remain solvent and retain employees during the COVID-19 pandemic.
Businesses that have fewer than 500 employees and most nonprofit organizations are eligible to apply for PPP loans. Sole proprietors, independent contractors, and self-employed individuals are eligible to apply for PPP loans.
Eligibility is limited to businesses, nonprofit organizations, sole proprietors, independent contractors, and self-employed individuals in operation prior to February 15, 2020. Please check with your bank and other
professionals for information regarding eligibility.
Borrowers qualify for an automatic 6-month complete payment deferral that includes principal, interest, and fees that may be extended up to 1 year.
The maximum loan amount per borrower is the lesser of a formula-based calculation based on payroll obligations or $10 million.
Maximum loan amounts are the product of multiplying the average monthly payroll costs of the one-year period before loan application by 2.5. (i.e., ($25,000 average monthly payroll costs April 1, 2019, to March 31, 2020) X (2.5) = $62,500 maximum loan amount).
Applicants operational prior to February 15, 2020, but not operational for a year will use average payroll costs for January 2020 and February 2020 as the payroll variable in the maximum loan amount formula.
Borrowers may use loan proceeds to meet eligible payroll costs (see restrictions below); mortgage interest payments; rent; utilities; and interest on other debt incurred before February 15, 2020.
salaries, wages, and commissions
vacation, family, medical, or sick leave
group health insurance premiums
state and local employee compensation taxes
Individual employee compensation that exceeds $100,000 as prorated by program rules
Compensation for employees whose principal place of residence is outside of the United States
Qualified sick leave wages covered by the Families First Coronavirus Response Act
Qualified family leave wages covered by the Families First Coronavirus Response Act
Loan disbursements used during the 8 weeks immediately following loan origination to fulfill payroll, rent, utilities, and mortgage interest obligations are eligible to be forgiven.
Non-forgivable loan balances are payable over a 10-year term with an interest rate of no more than 4 percent.
SBA authorized lenders will manage loan application, disbursement, and payments.
Click here to apply.
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