PAYCHECK PROTECTION PROGRAM (PPP)
When can I apply for a PPP loan?
Small businesses and sole proprietorships can apply for loans starting TODAY, Friday, April 3. Starting April 10, independent contractors and self-employed individuals can apply (according to the Treasury guidelines). Loans will be given on a first-come, first-served basis.
Can I go to any bank to apply to the Paycheck Protection Program?
This program has expanded to include any existing SBA 7(a) lender that offers SBA loans, including traditional banks, credit unions, and Farm Credit System institutions.
What documents will I need when applying for a PPP loan?
What can I use a PPP loan for?
How much can I borrow through a PPP loan?
Small businesses can borrow up to 2.5 times their average monthly payroll from the previous year through the Payroll Protection Program, which provides forgivable loans to small businesses intended to help pay their employees during the coronavirus crisis, but payroll is capped at $100,000 per employee, and the loans are capped at $10 million per business. The
SBA's guidelines state
: payroll costs, including benefits; interest on mortgage obligations, incurred before February 15, 2020; rent, under lease agreements in force before Feb. 15th; and utilities, for which service began before Feb. 15th
How much will I have to pay back?
According to the SBA, the Payroll Protection Program loan will be "fully forgiven" if the money is used as outlined. For employers who keep or quickly rehire their employees and maintain salary levels, the loan will be forgiven. However, "forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease." Decisions on the forgiveness of the Paycheck Protection Program loan will be made within 60 days of forgiveness submission. The SBA notes the loan has a maturity of 2 years and a fixed interest rate of 1% (changed from 0.5% on Thursday). Loan payments will be deferred for six months.
What if I've already laid off some of my staff? Can I still apply?
In order to get full loan forgiveness, companies need to maintain pre-crisis levels of full time employees. Companies are able to lay off staff while they have the SBA loan, but forgiveness of the loan will be reduced (meaning they'll have to repay a certain amount) in the event they have reduced full-time staff or salaries. According to the SBA, small businesses have "until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020" for forgiveness of the loan.
*This information was paraphrased from the Small Business Administration (SBA) and US Treasury websites. Refer to each website directly for the most up-to-date program information.