The Paycheck Protection Program (PPP)
Updated: Apr 13, 2020
The Paycheck Protection Program (PPP) is a key section within the recently passed Coronavirus Aid, Relief and Economic Security Act (CARES) Act that allocates $349 billion for small business (< 500 employees) loans to support payroll and certain other expenses. Loans are available for up to 2.5 times of your average monthly payroll during the year preceding the application, with a maximum loan of $10 million. If employers maintain their payroll and use loan funds for allowed expenses like payroll, rent and utilities for the first 8 weeks after the loan is issued, the loan amount is forgiven. The PPP is retroactive to February 15, 2020.
Small Business Loans through local lenders offered to small businesses with fewer than 500 employees
Self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply (have to be in operation before February 15)
Loans up to $10 million or 2.5 times the average monthly payroll costs (whichever is less)
Includes wages for employees making under $100,000, expenses for paid sick leave, healthcare and other benefits
The maximum interest rate is 1%
The loan term is 2 years
No personal guarantee or collateral is required for the loan
Payments deferred for 6 months
Part of loan may be forgiven if spent during the first 8 weeks on operating expenses
Loans are forgiven when used for Payroll (prorated for those making less than $100,000), Rent, Utilities, or Group Health Insurance
Businesses can apply directly through their local lending institution starting April 3; Freelancers and individual contractors starting April 10
When can Small Businesses start applying?
Starting April 3, 2020, small businesses and sole proprietorships can apply for loans to cover their payroll and other certain expenses through existing SBA lenders.
Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
What information is needed to apply?
Borrower certification required by the SBA
Any payroll filings and Form 1099-MISC reported to the IRS, and state income, payroll, and unemployment insurance filings
Borrower loan application
Contact your bank to obtain the PPP application to get the process started. Be sure to also ask for their list of additional documents needed to get process started
If your bank is not processing PPP applications, and/or if you run into any issues processing the loan through your bank, consider submitting an online application through www.kabbage.com. Alternatively, consider starting a new banking relationship with your local community bank and/or Federal Credit Union to file the application
Continue to reference the SBA PPP site for the latest information on this program