SBA and Treasury Department launch Paycheck Protection Program to support small businesses
By Sherman Greeer
April 6, 2020
The Small Business Administration, with support from the Department of the Treasury, has launched the Paycheck Protection Program to support businesses to meet operational expenses due to financial losses resulting from the coronavirus (COVID-19) pandemic. Funds can be used to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
Small business and sole proprietorships may apply now. Independent contractors and self-employed individuals may begin applying April 10. Loans can be up to 2.5 times the borrower’s average monthly payroll costs, not to exceed $10 million.
There is a loan cap on the program. Applicants are encouraged to apply quickly. The program is open through June 30, 2020.
Participating lenders include:
- SBA 7(a) lenders
- Federally-insured depository institutions
- Federally-insured credit unions
- Participating Farm Credit System institution
WHO IS ELIGIBLE?
- Businesses with 500 or fewer employees are eligible, inclusive of nonprofit organizations, veteran’s organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors,
- Businesses in certain industries with more than 500 employees are eligible.
IS THIS LOAN FORGIVEN?
To have the loan fully forgiven:
- At least 75% of the forgiven amount must have been used for payroll.
- Funds should be used for interest on mortgages, rent and utilities.
- Employers must maintain or quickly rehire employees and maintain the employees at their salary levels; if full time headcount declines or salaries and wages decrease, forgiveness will be reduced.
Payroll documentation is required. No collateral or personal guarantees are required. No fees will be incurred from the government or lenders.
For more information about the Paycheck Protection Program, see the Coronavirus (COVID-19): Small Business Guidance & Loan Resources website.