Bay Colony Development Corp. in the News
The Economic Aid Act passed by Congress and signed into law at the end of December provides benefits to small business borrowers with SBA loans. The Act provides additional funding for the PPP loan program, rescinds the Tax Implications that previously applied to PPP Loans, EIDL Advances and Grants and payments previously made under the CARES Act Payment Subsidies. But what does it mean for the 504 loan program? Many changes are coming to the program, and many of these changes will take time to implement as they will require SBA to issue Regulations, Notices, Updated SOP’s and revised forms. Please be patient and when the information on these changes is available we will share it with you. In the meantime, here are some highlights, which are all subject to full pending SBA implementation guidance.
Temporary Fee Eliminations for 504 Loans
For new loan approvals from date of enactment of new law (December 27, 2020) through September 30, 2021
- Waives 5% Third Party Lender Participation Fee –on loan in senior lien position in 504 project
- Waives 5% CDC Processing Fee (in debenture pricing)
- Offset with appropriation to fund fee to CDC
SBA guidance is expected to address handling of all loans in process at SLPC
DEBT RELIEF UNDER CARES ACT SECTION 1112
Qualifying Loans APPROVED prior to CARES ACT (March 27, 2020)
- 6 months of payment subsidies- these payments may have already been received by the borrower.
- 3 months of payment subsidies starting February 1, 2021, capped at $9,000/per loan per month.
- Additional 5 months (after 3 months) payment subsidies for loans to “underserved – hard hit” entities, capped at $9,000/per loan per month (see table below for NAICS codes). If a borrower is unaware of their NAICS code, they are encouraged to contact their accountant.
- Bay Colony Development Corp will be notifying existing borrowers in the coming weeks of what payment subsidies they will be entitled to. Any questions on what payments subsidies a borrower has already received, or will receive should be addressed with the Bay Colony Development Corp Servicing department.
Qualifying Loans APPROVED during the original CARES ACT (March 27, 2020 – September 27, 2020)
- 6 months of payment subsidies- these payments may have already been received by the borrower
Qualifying Loans APPROVED February 1, 2021 – September 30, 2021
- 6 months of payment subsidies, capped at $9,000/per loan per month
Loans APPROVED September 28, 2020 – January 31, 2021
- No payment subsidies
Why? Congressional intent of the subsidies is to provide “relief” to existing borrowers in place at the onset of the pandemic and to stimulate new loans that would not otherwise have occurred because of the pandemic.
Changes to the refinance program will take time to implement as SBA prepares to issue Regulations, Notices, Updated SOP’s and revised forms. Some of the changes as part of the Economic Aid Act are as follows:
- Elimination of prohibition on refinance of any government-guaranteed debt
- Elimination of requirement that 504 Debt Refinance without Expansion be suspended if the 504 Loan Program goes on subsidy
- Reduction from 2 years to 6 months required time that Qualified Debt must be in place for refinance eligibility. Please note start-up business do not qualify.
- Elimination of requirement that loan must have been current for not less than 1 year prior to application date. This is now a credit decision for the CDC
- 504 Debt Refinance With Expansion
- Increase in amount of debt eligible for refinance from 50% of expansion costs to 100% of expansion costs
- Refinancing Senior Project Debt
- During the 1-year period following enactment of the law, a CDC can process a cash-out subordination to re-leverage the TPL loan to a total 90% loan to value (LTV) when combined with the outstanding balance on the existing 504 loan
- Proceeds can be used to support business operating expenses
SBA 504 Express Loan Program
We are excited about the SBA 504 loan program, which will allow the processing of smaller 504 loans to be expedited and processed in house at the CDC. Again, the program will take time to implement as SBA prepares to issue Regulations, Notices, Updated SOP’s and revised forms, and we will keep you updated as more information is available and when the program is available to process applications.
- Temporary Program until September 30, 2023
- Delegated authority to approve, authorize, close, and service 504 loans of $500,000 Debentures or less
During these difficult times, we love seeing stories of our borrowers giving back. Frog and Toad located in Providence RI is a local gift shop that even though their brick and mortar stores are closed, are finding a way to give back to their community. They have created a couple of shirts with phrases we are all familiar with during the Coronavirus pandemic “Shut it Down and Knock It Off”. Frog and Toad is selling the shirts on their website frogandtoadstore.com and 20% of ALL sales of these shirt will be donated to the RI Foundation’s COVID-19 Response Fund. Great Job Frog and Toad!!! https://turnto10.com/news/local/governors-admonition-to-knock-it-off-now-a-t-shirt
Update 4/10/2020: Please refer to the SBA and Treasury websites for the latest program guidelines, as there have been updates almost daily to the program parameters.
The Small Business Administration and the Treasury Department have released details on how Borrowers and Lenders will be able to process applications for the Paycheck Protection Program. Please note that these applications will be processed by any bank, credit union or lender that is approved to process SBA 7a loans. Below please find borrower and lender information and the application link for the Paycheck Protection Program below. Your banks and bankers will be very busy assisting many small businesses, so please gather your documents and schedule a time to discuss your application with your banker. Links to the Treasury Department site and the SBA Paycheck Protection Program page are included for additional references.
Paycheck Protection Program Overview
The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of
payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and
Funds are provided in the form of loans that will be fully forgiven when 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.
Must Keep Employees on the Payroll—or Rehire Quickly
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.
All Small Businesses are Eligible
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations,
tribal concerns, self-employed individuals, sole proprietorships, and independent contractors
are eligible. Businesses with more than 500 employees are eligible in certain industries.
When to Apply
Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10,
2020, independent contractors and self-employed individuals can apply. We encourage you to
apply as quickly as you can because there is a funding cap.
How to Apply
You can apply through any existing SBA 7(a) lender or through any federally insured depository
institution, federally insured credit union, and Farm Credit System institution that is
participating. Other regulated lenders will be available to make these loans once they are
approved and enrolled in the program. You should consult with your local lender as to whether
it is participating. All loans will have the same terms regardless of lender or borrower. A list of
participating lenders as well as additional information and full terms can be found at
The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to
small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the
same for everyone.
The loan amounts will be forgiven as long as:
The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and
utility costs over the 8 week period after the loan is made; and
Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely
high subscription, it is anticipated that not more than 25% of the forgiven amount may be for
Loan payments will be deferred for 6 months.
When can I apply?
Starting April 3, 2020, small businesses and sole proprietorships can apply for and
receive loans to cover their payroll and other certain expenses through existing SBA
Starting April 10, 2020, independent contractors and self-employed individuals can
apply for and receive loans to cover their payroll and other certain expenses through
existing SBA lenders.
Other regulated lenders will be available to make these loans as soon as they are
approved and enrolled in the program.
Where can I apply?
You can apply through any existing SBA lender or through any federally
insured depository institution, federally insured credit union, and Farm Credit System institution
that is participating. Other regulated lenders will be available to make these loans once they are
approved and enrolled in the program. You should consult with your local lender as to whether it
is participating. Visit www.sba.gov for a list of SBA lenders.
Who can apply?
All businesses – including nonprofits, veterans organizations, Tribal business
concerns, sole proprietorships, self-employed individuals, and independent contractors – with
500 or fewer employees can apply. Businesses in certain industries can have more than 500
employees if they meet applicable SBA employee-based size standards for those industries (click
HERE for additional detail).
For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel
and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are
franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial
assistance from small business investment companies licensed by the SBA. Additional guidance
may be released as appropriate.
What do I need to apply?
You will need to complete the Paycheck Protection Program loan
application and submit the application with the required documentation to an approved lender
that is available to process your application by June 30, 2020. Click HERE for the application.
What other documents will I need to include in my application?
You will need to provide
your lender with payroll documentation.
Do I need to first look for other funds before applying to this program?
No. We are waiving
the usual SBA requirement that you try to obtain some or all of the loan funds from other sources
(i.e., we are waiving the Credit Elsewhere requirement).
How long will this program last?
Although the program is open until June 30, 2020, we
encourage you to apply as quickly as you can because there is a funding cap and lenders need
time to process your loan.
How many loans can I take out under this program?
What can I use these loans for?
You should use the proceeds from these loans on your:
Payroll costs, including benefits;
Interest on mortgage obligations, incurred before February 15, 2020;
Rent, under lease agreements in force before February 15, 2020; and
Utilities, for which service began before February 15, 2020.
What counts as payroll costs? Payroll costs include:
Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each
Employee benefits including costs for vacation, parental, family, medical, or sick leave;
allowance for separation or dismissal; payments required for the provisions of group
health care benefits including insurance premiums; and payment of any retirement
State and local taxes assessed on compensation; and
For a sole proprietor or independent contractor: wages, commissions, income, or net
earnings from self-employment, capped at $100,000 on an annualized basis for each
How large can my loan be?
Loans can be for up to two months of your average monthly
payroll costs from the last year plus an additional 25% of that amount. That amount is subject to
a $10 million cap. If you are a seasonal or new business, you will use different applicable time
periods for your calculation. Payroll costs will be capped at $100,000 annualized for each
How much of my loan will be forgiven?
You will owe money when your loan is due if you use
the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities
payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated
that not more than 25% of the forgiven amount may be for non-payroll costs.
You will also owe money if you do not maintain your staff and payroll.
Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time
Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and
wages by more than 25% for any employee that made less than $100,000 annualized in
Re-Hiring: You have until June 30, 2020 to restore your full-time employment and
salary levels for any changes made between February 15, 2020 and April 26, 2020.
How can I request loan forgiveness?
You can submit a request to the lender that is servicing
the loan. The request will include documents that verify the number of full-time equivalent
employees and pay rates, as well as the payments on eligible mortgage, lease, and utility
obligations. You must certify that the documents are true and that you used the forgiveness
amount to keep employees and make eligible mortgage interest, rent, and utility payments. The
lender must make a decision on the forgiveness within 60 days.
What is my interest rate?
1.00% fixed rate.
When do I need to start paying interest on my loan?
All payments are deferred for 6 months;
however, interest will continue to accrue over this period.
When is my loan due?
In 2 years.
Can I pay my loan earlier than 2 years?
Yes. There are no prepayment penalties or fees.
Do I need to pledge any collateral for these loans?
No. No collateral is required.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement.
***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue
criminal charges against you.***
What do I need to certify?
As part of your application, you need to certify in good faith that:
Current economic uncertainty makes the loan necessary to support your ongoing
The funds will be used to retain workers and maintain payroll or to make mortgage,
lease, and utility payments.
You have not and will not receive another loan under this program.
You will provide to the lender documentation that verifies the number of full-time
equivalent employees on payroll and the dollar amounts of payroll costs, covered
mortgage interest payments, covered rent payments, and covered utilities for the eight
weeks after getting this loan.
Loan forgiveness will be provided for the sum of documented payroll costs, covered
mortgage interest payments, covered rent payments, and covered utilities. Due to likely
high subscription, it is anticipated that not more than 25% of the forgiven amount may
be for non-payroll costs.
All the information you provided in your application and in all supporting documents
and forms is true and accurate. Knowingly making a false statement to get a loan under
this program is punishable by law.
You acknowledge that the lender will calculate the eligible loan amount using the tax
documents you submitted. You affirm that the tax documents are identical to those you
submitted to the IRS. And you also understand, acknowledge, and agree that the lender
can share the tax information with the SBA’s authorized representatives, including
authorized representatives of the SBA Office of Inspector General, for the purpose of
compliance with SBA Loan Program Requirements and all SBA reviews.
Who is eligible to lend?
All existing SBA-certified lenders will be given delegated authority to speedily process PPP loans.
All federally insured depository institutions, federally insured credit unions, and Farm Credit
System institutions are eligible to participate in this program.
A broad set of additional lenders can begin making loans as soon as they are approved and
enrolled in the program. New lenders will need to submit their application to
DelegatedAuthority@sba.gov to apply with the SBA.
Are these loans guaranteed by the SBA?
Yes, the SBA guarantees 100% of the outstanding
balance, and that guarantee is backed by the full faith and credit of the United States.
Are there guarantee fees?
The SBA waives all SBA guaranty fees, including the upfront and
annual servicing fees.
What underwriting is required?
You will need to verify that a borrower was in operation on
February 15, 2020. You will need to verify that a borrower had employees for whom the
borrower paid salaries and payroll taxes. You will need to verify the dollar amount of average
monthly payroll costs. You will need to follow applicable Bank Secrecy Act requirements.
How will lenders be compensated?
Processing fees will be based on the balance of the
financing outstanding at the time of final disbursement:
Loans $350,000 and under: 5.00%
Loans greater than $350,000 to $2 million: 3.00%
Loans greater than $2 million: 1.00%
Lenders may not collect any fees from the applicant.
Who can be an agent? An agent is an authorized representative and can be:
Someone who prepares an applicant’s application for financial assistance and is
employed and compensated by the applicant;
Someone who assists a lender with originating, disbursing, servicing, liquidating, or
litigating SBA loans;
A loan broker; or
Any other individual or entity representing an applicant by conducting business with the
How will agents be compensated?
Agent fees will be paid out of lender fees. The lender will
pay the agent. Agents may not collect any fees from the applicant.
Loans $350,000 and under: 1.00%
Loans greater than $350,000 to $2 million: 0.50%
Loans greater than $2 million: 0.25%
Can these loans be sold in the secondary market?
PPP loans can be sold in the secondary
market. The SBA will not collect any fee for any guarantee sold into the secondary market.
Small Business Assistance Loans via Stimulus Bill
We congratulate our nation’s congressional leaders on coming to an agreement and passing a $2.2 trillion emergency spending bill to combat the economic impact of coronavirus. As we understand it, the bill includes approximately $350 billion aimed at helping small businesses weather the economic storm.
The $2.2 trillion coronavirus stimulus bill enacted by Congress on March 27 provides immediate cash assistance to small businesses that keep their employees or recall employees they have furloughed or laid off due to financial hardships related to COVID-19. The money is available through a Small Business Administration (SBA) loan program that allows businesses to keep the loan proceeds as a grant for eligible expenses, including payroll, for the period between February 15 and June 30, 2020.
This program, called the Paycheck Protection Program (PPP), is a powerful tool for businesses with fewer than 500 employees to get immediate assistance with meeting operating expenses, with the prospect of not having to repay some or all of the loan. It’s also available for nonprofits.
Here are the highlights of the program:
Maximum Loan Amount
- The PPP raises the maximum amount for an SBA loan by 2.5x the average total monthly payroll cost, or up to $10 million. The interest rate may not exceed 4%.
- Payroll costs
- Continuation of health care benefits
- Employee compensation (for those making less than $100,000)
- Mortgage interest obligations
- Rent on any lease in force prior to February 15, 2020
- Interest on debt incurred before the covered period
Businesses Eligible to Obtain These Loans
- Businesses with fewer than 500 employees.
- Small businesses as defined by the Small Business Administration (SBA) Size Standards at 13 C.F.R. 121.201.
- 501(c)(3) nonprofits, 501(c)(19) veteran’s organization, and Tribal business concern described in section 31(b)(2)(C) of the Small Business Act with not more than 500 employees.
- Hotels, motels, restaurants, and franchises with fewer than 500 employees at each physical location without regard to affiliation under 13 C.F.R. 121.103.
- Businesses that receive financial assistance from Small Business Investment Act Companies licensed under the Small Business Investment Act of 1958 without regard to affiliation under 13 C.F.R. 121.10.
- Sole proprietors and independent contractors.
All or a portion of the loan may be forgivable, and debt service payments may be deferred for up to one year. The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior year compensation. To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that rehire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
Current banks and credit union lenders through the Small Business Administration 7(a) are authorized to make determinations on borrower eligibility and creditworthiness without going through the SBA. For eligibility purposes, lenders will not be determining eligibility based on repayment ability, but rather whether the business was operational on February 15, 2020, and had employees for whom it paid salaries and payroll taxes, or a paid independent contractor.
The SBA is required to issue implementing regulations within 15 days, and the U.S. Department of Treasury will be approving new lenders. Until this time, lenders will not have the information available to process applications.
Economic Injury Disaster Loan (EIDL) Update
As of 3/26/20, the Disaster Loan Assistance portal has been revamped and the process has been simplified!
You now are only required to upload two (2) forms to initiate the process:
SBA Form 5/5C
If you already submitted an application and want to check on status, please call customer service at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail email@example.com
Instructions from the website follow below…
Economic Injury Disaster Loan Assistance
Small business owners in all U.S. states, Washington D.C., and territories are currently eligible to apply for a long-term, low-interest loan due to Coronavirus (COVID-19).
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
If you are applying for disaster assistance for another declaration, then please see the home owner’s and renter’s form here.
Instructions to Apply
- Download forms below
- Fill in your information
- Upload forms on this page below
- If you choose to mail, then please see Mailing Instructions below
Download Business Forms
- Business Loan Application (Form 5)(en Español)
- Home or Sole Proprietor Loan Application (SBA Form 5C)(en Español)
- Economic Injury Disaster Loan Supporting Information (Form P-019)
A Disaster Assistance loan officer may request you to fill out the following additional forms:
- Fee Disclosure Form and Compensation Agreement (Form 159D)
- Personal Financial Statement (SBA Form 413D)(en Español)
- Request for Transcript of Tax Return (IRS Form 4506-T)
- Instructions for Request for Transcript of Tax Return (IRS Form 4506-T)(en Español)
- Schedule of Liabilities (SBA Form 2202)
- Instructions for Schedule of Liabilities (SBA Form 2202)
- Schedule of Liabilities (SBA Form 2202) (en Español)
- PUERTO RICO ONLY: Release of Inheritance and Donation (Modelo SC 2907) (en Español)
- PUERTO RICO ONLY: Hacienda Statement of Authorization
- Additional Filing Requirements (SBA Form 1368)