The Paycheck Protection Program (PPP) of the CARES Act sets aside $350 billion to help small businesses. Here are some of the highlights:
- The program would provide cash-flow assistance through 100 % federally guaranteed loans to employers who maintain their payroll during COVID19.
- Small businesses and other eligible entities can apply for PPP loan if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020.
- This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020
- Loans have no collateral or personal-guarantee requirements (unlike other 7(a) loans). There will be no recourse to owners of borrowers for nonpayment, except to the extent proceeds are used for an unauthorized purpose.
What types of businesses and entities are eligible for a PPP loan?
- Small business/ nonprofit organization/veterans organization/Tribal business that has fewer than 500 employees
- Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals.
- Any business concern that employs not more than 500 employees per physical location of the business and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived.
What are allowable uses of loan proceeds?
- Payroll costs
- Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
- Employee salaries, commissions, or similar compensations
- Payments of interest on any mortgage obligation
- Interest on any other debt obligations that were incurred before the covered period
What are the loan term, interest rate, loan size, fees, restrictions?
– Maximum term :10 years
– Maximum interest: 4 %
– Maximum loan size: $10 million.
– Loan fees: Zero loan fees, zero prepayment fee
– An entity is limited to one PPP loan (each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity)
Is There a Forgiveness Feature of Covered Loans?
Yes, in the eight weeks following your loan originate date, all payments made related to the following can be forgiven:
- Mortgage interest
You must apply through your lender for forgiveness on your loan.
Where should I go to apply for PPP loan?
– Contact your bank to check if it is an approved 7(a) lender
– All current SBA 7(a) lenders are eligible lenders
Please be advised that this information is
intended to provide only a summary of the PPP and should not be deemed to be,
or relied upon as, a comprehensive guide. For more information and your
eligibility, refer to your accountant, tax advisor, business advisor, CARES act,SBA or lender . HubOrgs assumes no liability for
actions taken in reliance upon the information contained herein.