Hacker News Reader

Comment by CPLX | Hacker News Reader

This is interesting, but might lead to more confusion.

I've struggled to be absolutely sure on this point myself but my understanding from talking to my accountants is that there are terms in the bill that's currently moving through congress that will greatly affect what SBA options are available for startups and diverge sharply from what's listed here.

For example there's no mention here for the forgivable nature of loans used for payroll and similar expenses, which is a really crucial concept that I believe is in the final bill.

In their defense they're talking about disaster loans here which is a specific thing, but this is still a pretty fast moving topic and I think the site would be better off with an intro that spoke to these points.

View on HN

The post doesn't appear to be talking about the new Coronavirus relief bill, but rather the existing SBA Disaster Loans: https://disasterloan.sba.gov/ela/

The two are similar but are different in a few ways. Such as:

- The SBA Disaster Loans require a personal guarantee, but it appears that the Coronavirus relief does not

- The Coronavirus relief offers forgiveness for payroll expenses, but the SBA Disaster Loans do not

This is moving fast and as others have mentioned, the Coronavirus relief bill is brand new. You should talk to an accountant or a lawyer to learn which is right for you.

Yes, I believe this is correct. This post is outlining the details of the economic disaster loans that are offered directly by the SBA and described in the link by the parent. The current legislation refers to these existing loans as 7(b). I believe the new stimulus bill, at least the senate version that I skimmed, deals largely with loans made by other financial institutions and referred to as 7(a). Those are covered here: https://www.sba.gov/partners/lenders/7a-loan-program/types-7.... Of course that information is now made out of date by the just passed legislation.

Exactly. And given those terms, the "new" Coronavirus bill looks to be way more favorable for startups, hence my concern that this post could be more confusing than helpful.

Normal SBA loans require a personal guarantee. The Disaster Loans for Coronavirus do not.

My understanding is that even the disaster loans will still require collateral and personal guarantees. Unsure if they're waiving or changing those rules or plan to.

Disaster loans have been around long before COVID-19.

Again, this is different than the Paycheck Protection section of the CARES Act which covers 2.5X of the average monthly payroll from 2019 that is subject to loan forgiveness and does not require personal guarantees or collateral.

I've just gotten the paperwork for our disaster loan. The COVID loans do not have a personal guarantee. That was one of the items on the first relief bill that specified this program on March 6.

That bill got approved 9 minutes ago:

https://edition.cnn.com/2020/03/27/politics/coronavirus-stim...

Here's the text of the bill if anyone's interested in reading it: https://www.congress.gov/bill/116th-congress/house-bill/748/...

This is definitely understandable, especially if you are unsure about the process. Regardless of any changes made later, the funds will likely still be distributed on a first-come, first-served basis.

If you're in need of a larger amount (over $500k), it might be worth tracking down some accountants or lawyers from disaster regions who have worked with these loans before.

Reply on news.ycombinator.com