Now that local banks are gearing up to assist the federal government in its effort to provide small businesses with financial relief, it’s time to get ready to apply.

Within a few days, banks will begin processing applications that will require a range of financial records. Now would be a good time for businesses that have been hurt by the COVID crisis to begin compiling balance sheets, financial statements and payroll records.

Contact your local bank for more details.

The following is a rundown of basic information about the program:

Loan Eligibility. Any business that employs 500 or fewer employees is eligible for a loan. Non-profit organizations, independent contractors, sole proprietors and self-employed individuals also are eligible.

Maximum Loan Amount. An eligible employer may borrow an amount that does not exceed 2.5 times the employer’s average monthly payroll costs. “Payroll costs” includes salaries, wages, tips, paid time off, group health care benefits and state and local taxes but may not include compensation paid to any employee who earns an annual salary of $100,000 or more.

Uses for Loaned Amount. An employer may use borrowed funds to pay payroll costs, group health insurance premiums, interest on mortgage loans and other pre-existing debt, rent and utility costs. An employee being paid with loan proceeds need not perform employment duties. The Act also permits an employer to rehire and pay from loan proceeds any employee laid off before the legislation passed.

Obtaining a Loan. Any bank or other lender authorized to make Small Business Administration loans may make loans under the Act. To expedite processing of loan requests, these lenders have full authority to make loans. The only loan criteria set forth in the Act are whether the applicant on Feb. 15, 2020, was in operation and paid employees and/or independent contractors. A lender may not require any individual to personally guarantee repayment of the loan.

Loan Forgiveness. Each borrower is eligible for significant loan forgiveness. The amount to be forgiven is the total of the borrower’s payroll costs, mortgage interest, rent and utilities paid during the eight weeks after the loan was made. The amount of the forgiveness is not treated as income for tax purposes. If, however, an employer by June 30, 2020, does not return to pre-Feb. 15, 2020, employment or payroll levels, the amount forgiven will be proportionately reduced. Any amount not forgiven must be repaid over ten years.