Coronavirus (COVID-19)
Information for Employers and Small Business Clients on the
Paycheck Protection Program Loan
Small Business Administration ("SBA") Paycheck Protection Program Loan
The Paycheck Protection Program, a Small Business Administration (“SBA”) loan program created under the recently passed federal Coronavirus Aid, Relief, and Economic Security (CARES) Act, offers small businesses much-needed cash-flow assistance in these uncertain times by way of a loan, which may be forgiven. The highlights of this greatly beneficial program are below: 
Generally, businesses with 500 or fewer employees are eligible to apply, with certain exceptions.

Allowed Uses of Loan Proceeds
The loan can be used for the following costs incurred by your business between February 15, 2020 through June 30, 2020:
  • Payroll Costs, which include:
  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
  • Employee benefits, including costs for vacation, parental, family, medical, or sick leave; allowance for employee separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefits
  • State and local taxes assessed on compensation
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
  • Interest on mortgage loans, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities, for which service began before February 15, 2020

Loan Amount
The amount of the loan for each borrower will be calculated as follows: the average total monthly payments by the business for payroll costs incurred during the one-year period before the date the loan is made, multiplied by 2.5.
  • The loan amount is capped at $10 million per borrower.
  • Your lender will calculate the amount your business is eligible for based on the payroll documentation you provide as part of your application.
Loan Terms
The following terms will apply to all loans under this program:
  • Interest rate: 1% fixed rate (for non-forgiven portion of the loan)
  • Term: 2 years (for non-forgiven portion of the loan)
  • Payment Deferral: All payments on the loan are deferred for 6 months (interest will continue to accrue over this period).
  • Security Waived:
  • No personal guarantees required
  • No collateral required
  • Fees Waived:
  • No SBA Fees
  • No Lender Fees (the SBA pays your lender’s processing fees directly)
  • No Attorneys’ Fees or fees for other professionals who assist you with filing your application. Attorneys and other professionals will be compensated directly by the SBA/Lender.
  • No Prepayment Penalties
  • No need to prove that your business cannot obtain funds elsewhere or through other loan programs

Loan Forgiveness
The following will apply to the loan:
  • The principal amount of the loan will be forgiven, provided the following conditions are met:
  • The loan proceeds are used to cover payroll costs, and mortgage interest, rent, and utility costs over the 8-week period after the loan is made (this will need to be substantiated by the borrower)
  • Employee and compensation levels are maintained
  • Interest accrued on the loan will not be forgiven
  • If a borrower uses less than 75% of the proceeds on payroll costs, the amount exceeding 25% used on other eligible costs (such as mortgage interest) will not be forgiven
Because there is a funding cap, and because we anticipate a large number of applications will be filed under this program, we encourage you to apply as soon as possible . Please see our loan application checklist to help get you started.
Should you have further questions about the CARES Act or the Paycheck Protection Program, feel free to contact our office.
We Are Here to Help in This Time of Need
Many of our clients have raised questions about remote work arrangements, essential employees reporting to work, layoffs, health insurance continuation, medical inquiries and employee privacy. 

Phifer Pinkham, LLC will remain open, subject to any additional government orders, during normal business hours to assist you with any questions you may have.

We will continue providing updates and guidance as more information becomes available.
Phifer Pinkham, LLC is a full service law firm representing businesses, their owners, and individuals in connection with their legal needs in the areas of business and corporate law, litigation, estate planning and administration, employment law, taxation, intellectual property, and non profit representation. We provide premium legal services without the Boston premium. Please contact us at (617) 409-7409 to set up an in-person or phone consultation, or please feel free to contact any of our attorneys directly at the email address links provided below.