NADA Shares New Information About SBA Loans for Dealers - Digital Air Strike

NADA Shares New Information About SBA Loans for Dealers

NADA Shares New Information About SBA Loans for Dealers

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Small businesses with 500 or fewer employees can start applying now for a piece of the $2.2 trillion stimulus package designed to help those affected by the coronavirus pandemic, but there are several things to consider first before companies start filling out the paperwork.
NADA, the National Automobile Dealers Association, hosted an April 1 webinar on how to make sense of the new U.S. Small Business Administration Paycheck Protection Program loans, along with practical considerations for auto dealers.

Andy Koblenz, NADA’s executive vice president of legal and regulatory affairs and general counsel, and David Regan, NADA’s executive vice president of legislative affairs, led the webinar. The two experts discussed everything from eligibility to loan forgiveness for the SBA lending program authorized by the latest stimulus package under the CARES Act.
Both Koblenz and Regan cautioned changes are being made daily to the program, so it’s wise to work with trusted lawyers and accountants who can help navigate through this fluid process. They stressed NADA will be advocating for a streamlined common-sense approach because they want clarity on the program.
“The dealer’s business model is essential to restoring Main Street America,” Regan said in the webinar.

Here are some key points from the NADA webinar:
• Businesses need to have 500 or fewer employees to qualify.
• Dealers should only work with lenders who are SBA approved to get the loan. Visit the SBA Lender Match at https://www.sba.gov/lendermatch to find qualified lenders.
• While dealers should contact their lender to discuss the loan application process, it’s best to look at lenders with whom you already have a relationship with. This will be a personal process and you will need an informed advocate.
• Seek advice from your lender on the timing of the application process and the lender’s capacity to process the loan.
• There’s no double dipping. Dealers cannot have applied for other SBA loans.
• This is a new $350 billion program designed to send money out quickly, but demand will be enormous. Because of this, dealers need to have some patience throughout the process.
• Dealers will be required to show how the novel coronavirus affected their business, including layoffs.
• What is the maximum loan amount that can be borrowed? The amount depends on calculations regarding payroll costs, but the final amount is no greater than $10 million.
• Funds can be used to retain workers, maintain payroll and pay rent and utilities, as well as interest on any mortgage obligation and interest on any other debt obligations that were incurred before Feb. 15, 2020.
• The loans are 100% government guaranteed.
• Expenses, including actual payroll costs, must be incurred during the eight weeks following the loan. Other expenses that can be forgiven include interest on an indebtedness or debt instrument, rent paid on a lease in force before Feb. 15, and utilities paid for service which began before Feb. 15.
What it takes for a loan to be forgiven:
• The general rule is up to 100% of the principal may be forgiven, but that is subject to the types of expenses funded with the loan proceeds, reductions based on headcount and/or level of pay, etc.
• There is documentation needed for loan forgiveness, which will be more than required to obtain the loan. This includes proof of payroll payments and additional documentation.
• The lender will issue a decision within 60 days of the borrower’s application for forgiveness.
• It is a violation of federal law to give incorrect information in an SBA loan.
To learn more about the topic, download NADA’s webinar slide deck at https://www.nada.org/SBA-Paycheck-Protection-Program/.


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