CARES Act Paycheck Protection Program for Small Businesses
The Paycheck Protection Program (PPP) is a federal relief program established by Congress and implemented by the U.S. Treasury Department and the Small Business Administration (SBA) to provide small businesses with the resources they need to maintain their payroll, hire back employees who may have been laid off, and cover applicable overhead as a resilt of COVID-19.
This program is available for businesses "substantially affected by COVID-19," interpreted as supply chain disruptions, staffing challenges and/or a decrease in sales or customers; or shuttered businesses.
Who's Eligible: Any business, nonprofit organization in operation on February 15, 2020 with up to 500 employees, for whom the borrower paid salaries and payroll taxes. Some sole-proprietors, independent contractors, and other self-employed individuals may be eligible for loans as well.
Loan Maximums: Maximum loan amounts will vary, based on monthly expenses for the items set forth related to payroll, mortgage or rent payments and other debt, and are capped at $10,000,000.
Funds may be used for:
- Payroll and related cost (administrative, sick leave, group health premiums)
- Mortgage payments
- Interest on debt obligations incurred before February 15, 2020
Loan Payment Deferral: Loan payments can be deferred for 6 months.
Loan Terms: Generally, the maximum loan amount will be 2.5 times monthly payroll (250% of average monthly payroll) plus the outstanding applicable loan amount (not to exceed $10,000,000). Actual terms will vary, by business.
Eligibility for Loan Forgiveness: Loan forgiveness amounts are predicated upon maintaining payroll continuity and other allowable costs during the covered periods (8 weeks from loan origination). Calculation of amount forgiven is based on total payroll cost and payments made on debt during covered period, less the percentage of layoffs during the covered period as well as any salary reduction that exceeds 25% of the individual’s salary. Documentation for loan forgiveness will include Federal and State tax filings, financial statements verifying payment of debt obligation and other documentation.
EIDL Loans and Paycheck Protection Program: Businesses that have received or will receive EIDL (Economic Injury Disaster Loans) between February 15, 2020 and June 30, 2020, have the option to refinance these loans under the parameters of the Paycheck Protection Program, with outstanding amount of the EIDL loan being added to the payroll sum within the Paycheck Protection Program loan.