Under the bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act is expected to deliver about $349 billion of loans and grants to the Small Business Administration, for which thousands of brands and businesses in the fashion industry would qualify. An additional $500 billion will be set aside for larger corporations.
These short-term loans are designed to help companies cover payroll, rent, utilities and any debt payment due during this time of uncertainty. Any business with 500 or fewer employees is eligible. The maximum loan amount is $10 million, and interest rates are capped at 4 percent. Businesses are required to repay these loans after a year, but some portions will be completely forgiven, depending on how companies use the cash.
Currently, companies can apply for an SBA loan online. After the stimulus bill is signed into law, the application process will likely be more streamlined and convenient, according to Jeff Trexler, associate director of the Fashion Law Institute at Fordham University. Lenders, including banks and credit unions, will be able to initiate the process and simply wait for SBA approval.