Small businesses and sole proprietorships that have been negatively impacted by the coronavirus pandemic can apply for federal loans under the federal Paycheck Protection Program (PPP) beginning this Friday, April 3, 2020.
The following week, beginning April 10th, independent contractors and self-employed individuals can apply.
The application can be found here along with details for borrowers and lenders.
We urge those in need of funding to contact us ASAP to determine if the loan is right for you and, if so, apply right away. The program has a cap and demand is likely to be very high.
Under the PPP, small businesses with 500 or fewer employees including not-for-profits, veterans’ organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors are eligible for loans to pay up to eight weeks of payroll costs including benefits as well as other costs. Businesses with more than 500 employees are eligible in certain industries.
These loans can be forgiven. Loan forgiveness is based on the employer’s maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease.
PPP funds can also be used to pay interest on mortgages, rent, and utilities. Treasury has noted that due to likely high demand for the program, at least 75% of the forgiven loan amount must have been used for payroll.
Loan payments will be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
An employer who receives a loan under the PPP is not eligible to also claim an employee retention credit under the CARES Act. The employee retention credit gives eligible employers whose business operations are fully or partially suspended due to the COVID-19 pandemic a credit against employment taxes equal to 50% of qualified wages (up to $10,000 in wages) for each employee.
For more information on the PPP, check out our blog from last week as well as our webinar.