SBA Provides Additional Guidance on Paycheck Protection Program and Issues Sample Applications
The Paycheck Protection Program is one of the key relief provisions included in the $2 trillion relief package under the CARES Act. This program provides forgivable loans to small businesses and nonprofit organizations to cover payroll costs, rent, mortgage interest and utilities. The program is administered by the Small Business Administration (“SBA”). Applicants must apply for loans through approved lenders. The SBA has announced that banking institutions may begin processing applications as early as April 3, 2020. To assist applicants gather the information they will need to apply, the SBA has provided a sample application on its website, which is available here.
The SBA also provided a few clarifications regarding the program:
- Approved lenders include any existing SBA 7(a) lender or participating federally insured institutions, credit unions, and Farm Credit System institutions. Additional regulated lenders will participate once they are approved and enrolled in the program. Employers should contact their banking institutions to determine whether they are participating in the program.
- The Paycheck Protection Program will be available through June 30, 2020.
- Due to the anticipated high subscription, of the amount of the loan forgiven, at least 75% must have been used on payroll costs.
- The loans will have a maturity of 2 years and an interest rate of 0.5%.
- Neither the government nor lenders will charge small businesses any fees.
We will continue to monitor and provide additional updates as they become available.
An updated summary of CARES Act employer relief programs is available here.
U.S. Department of the Treasury’s Paycheck Protection Program Fact Sheet
Small Business Administration’s Overview of the Paycheck Protection Program