The Promissory Note is directly from the SBA, there is no room for negotiation regarding their terms. If you need the funds, it is a “take it or leave it” option.
However, there are 10 things you should keep in mind before accepting their terms:
- Interest begins accruing from the Disbursement Date.
- Payments are deferred for the first 6 months.
- Loan is fully repayable in 18 equal monthly payments beginning on the 7th month. Due on the 5th day of each month.
- There is no Prepayment Penalty.
- If Payment is 10 days late, Lender can declare an immediate Default or can give relief.
- There are no Cure Periods in this Note.
- Lender has the ability to file suit or obtain judgment to collect all amount owed by Borrower.
- The note is non-recourse; however, SBA can go after any person that uses the funds for an unauthorized purpose.
- To the extent feasible, Borrower will purchase only American-made equipment and products.
- From Feb 15, 2020 to Dec 31, 2020, Borrower will not receive another PPP Loan.
Please note that you should not rely on only these 10 quick points when signing the Loan Documents. Be sure to read the documents for yourself or retain a professional to advise you before signing.
NOTICE: Attorney advertising. Attorney licensed to practice law in California only. Not intended as legal advice. No attorney-client relationship created hereby.