This week has seen many rapid changes, and unfortunately much uncertainty remains about how certain relief programs will work. However, due to the rapid pace at which Paycheck Protection Program (PPP) loan applications are being submitted to the U.S. Small Business Administration (SBA), we wanted to send out an update specifically about that program. As you’ll recall from our earlier correspondence, the PPP is a loan program that is designed to provide an incentive for small businesses to keep their workers on the payroll. On Thursday, April 2, 2020 the SBA issued an interim final rule for the PPP detailing certain implementation guidelines and requirements.
•The SBA could potentially forgive the loan if all employees are kept on the payroll for 8 weeks and the funds are used for payroll (including certain benefits), mortgage interest, rent, or utilities. At least 75% of the forgiven amount must have been used for payroll-related costs. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining compensation levels.
•Payroll costs are capped at $100,000 annually for each employee.
•Independent contractors do not qualify as employees.
•The interest rate for these loans will be 1%. (This is a change from the .5% rate that was previously reported.)
•The loan will have a maturity of 2 years.
•Loan payments will be deferred for 6 months. Interest will continue to accrue during the deferment.
•No collateral or personal guarantees are required.
•Neither the government nor lenders will charge small business applicants any loan fees.
Consult your local lender to find out whether they are participating in this program. Certain banks that previously announced their participation in this program have temporarily stopped accepting applications, so it is important that you determine your specific bank’s current status.
A copy of the loan application and additional instructions for potential borrowers are attached.
If you are interested in applying for the PPP loan for your business, please do not delay.
Information for this email was obtained from https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp. While we are providing this information to assist you with your application, Manley Garvin is not allowed to, and therefore does not, attest to anything related to the potential application, your company’s creditworthiness, potential loan qualification, or potential loan forgiveness.