CARES (Coronavirus Aid, Relief, and Economic Security) Act:
The first round of the CARES Act appropriates $220.6 billion to labor, health and human services, education, transportation, housing and urban development, and related agencies. The Act granted $454 billion to the Federal Reserve and Treasury to improve liquidity and $349 billion to small-business assistance programs.
The second round of the CARES Act was signed on April 24, 2020 by the president and applications will open on April 27, 2020. Click on the link for more details: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program#section-header-0
Applies to federally backed mortgage loans (Fannie/Freddie/FHA/VA/USDA) for those directly or indirectly impacted by the COVID-19 virus. If requested and granted by a loan servicer, the initial period is up to 180 days, with the option to extend for an additional 180 days. No additional fees, interest, or penalties can be assessed for the forbearance. Except for abandoned or vacant property, there may be no foreclosure actions for 60 days from 3/18/2020.
Investors and owners of multifamily residences who were current on their mortgage payments as of February 1, 2020, and have federally insured, assisted, or supplemented loan (Fannie Mae, Freddie Mac, FHA or any loans backed or assisted by any branch of the federal government, including LIHTC), can apply for a total of 90 days of forbearance, which will be granted in 30-day increments. This applies to federally insured, guaranteed, supplemented, or assisted mortgages, including mortgages purchased or securitized by the GSEs. Borrowers receiving the forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.
Moratorium on eviction filings, or fees or penalties for tenants for nonpayment of rent for 120 days on properties insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, covered by the Violence Against Women Act of 1994.
Department of Housing and Urban Development (HUD)
HUD was granted a total of $17.4 billion to distribute across the following:
$5 billion for Community Development Block Grants (CDBG) - to help communities and states address COVID-19.
$4 billion in homelessness assistance - Emergency Solutions Grants (ESG) to help prevent an outbreak among sheltered and unsheltered people experiencing homelessness and very low-income households (earning less than 50% of Area Median Income) who are at risk of homelessness.
$1.25 billion in tenant-based assistance – Includes for Section 8 voucher rental assistance for seniors, the disabled, low-income working families, who will experience loss of income from the coronavirus.
$1 billion in project-based rental assistance- to make up for reduced tenant payments as a result of coronavirus.
$50 million for housing for the elderly - Section 202 Housing for the Elderly to maintain housing stability and services for low-income seniors.
$15 million for housing for persons with disabilities - Section 811 Housing for Persons with Disabilities to make up for reduced tenant payments as a result of coronavirus
Emergency Economic Injury Disaster Loan (EIDL) Grants (Section 1110)
Businesses with 500 employees or fewer, including sole proprietors, independent contractors, and cooperatives are eligible for Economic Injury Disaster Loans (EIDL) during the covered period of January 31st to December 31, 2020 in response to COVID-19.
The business must show hardship due to the Coronavirus.
The Economic Injury Disaster Loans are available for up to $2 million dollars for businesses.
SBA can determine loan eligibility based solely on the applicant’s credit score or use of an alternative appropriate method for determining an applicant’s ability to repay.
The SBA waives any personal guarantee on loan advances or loans under $200,000.
$10 billion in funding to provide an emergency advance of up to
Small businesses that apply the Economic Injury Disaster Loan (EIDL) may receive up to $10,000, which may be a forgivable debt. Please direct all questions to the SBA website for more information.
The SBA has increased funding for its Economic Injury Disaster Loans (EIDL). These loans can be used for:
Paid sick leave to employees impacted by COVID-19
Debt Obligations Due To Lost Revenues
Increased costs due to supply chain disruptions and materials
SBA 7(a) Payroll Protection Program (Section. 1102 & 1106)
Businesses with 500 employees or less, including sole proprietors and independent contractors, are eligible for SBA 7(a) loans in response to COVID-19 covering expenses for the period of February 15, 2020 through June 30, 2020.
The loan amount will be 250% of the average salary expenditures/month for 2019, up to $10 million. For businesses not open yet in that period, the SBA will look at earlier receipts from 2020.
7(a) loans can be used for:
All or a portion of these loans will be forgivable for businesses that maintain at least 75% of the average payroll levels as in the previous year; forgivable amounts phase out as employers payroll levels drop below that.
The bill also increases the SBA “Express Loan” limit from $350 thousand to $1 million.
Student loan payments will suspend all payments on federal student loans for 6 months with no interest during the forbearance period.
Americans with incomes below the thresholds will receive cash payments from the federal government in the amount of $1,200 per adult plus $500 for each child under the age of 17. These payments should be sent out starting in April. More information can be found here.
Other Cash Sources
Retirement accounts can take an early withdrawal of up to $100,000 without the early with-draw penalty and pay the normal tax on the amount over a three year period.
Businesses with 100 or fewer employees can claim a refundable employee retention tax credit against payroll taxes of up to $5,000 per employee under certain circumstances.
The unemployment assistance benefits are provided to individuals who are unemployed, partially unemployed, or unable to work for the weeks those individuals were impacted as a result of COVID-19 between January 27- December 31, 2020.
Individuals who apply for unemployment benefits through their state will also qualify for Federal Pandemic Unemployment Assistance for up to four months that the authority of the issuing states. Unemployment benefits will also be extended for an additional 13 weeks for a maximum of 39 weeks.
U.S. Small Business Administration Disaster Loan Assistance
The U.S. Small Business Administration offers a Disaster Loan Assistance program to qualifying small businesses to use toward payroll, utilities, and other expenses when there is a declared disaster. In the case of COVID-19 these would be economic Injury Disaster Loans(EIDL). Loans can be up to $2 million at a fixed 3.75% for a loan amount for up to 30 years based on the borrower’s ability to repay.
More overview information can be found here:
Keep American Workers Paid and Employed Act
Disaster Loan Declarations
Senate’s Coronavirus Bill
Coronavirus Supplemental Appropriations Summary
Lenders participating in the Paycheck Protection Program by State
The One Tampa: Relief Now, Rise Together: https://www.tampagov.net/relief-now/businesses
SBA Disaster Assistance: https://www.sba.gov/funding-programs/disaster-assistance
Florida Disaster Loan: https://floridadisasterloan.org
CARES Act Retirement Provisions FAQ: https://www.finance.senate.gov/chairmans-news/cares-act-retirement-provisions-faq
Payment Protection Program (PPP): https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
Blue Dolphin Capital is thankful that the House and Senate came together to pass bipartisan legislation to fund the government through FY 2020
*Blue Dolphin Capital is a mortgage brokerage business that specializes in residential and commercial loans, and is doing its part to play a critical role in ensuring home purchase and refinancing mortgages for the middle class, low- and moderate-income homeowners, including minority and rural households, veterans and many others in underserved communities.