What you need to know about the Paycheck Protection Program

The Paycheck Protection Program (PPP) is a Small Business Administration (SBA) loan created to help businesses continue to employ their workforce amidst the COVID-19 pandemic.

Basic information
The Paycheck Protection Program is a loan designed to incentivize a continued employed workforce and will forgive loans if all employees remain on the payroll for eight weeks. The money must be used for payroll, rent, mortgage interest and utilities.

Small businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available once they are approved and enrolled in the program.

Loan applications can be processed as soon as April 3, 2020, and the program will be available through June 30, 2020.

Who can apply?
The following businesses affected by COVID-19 may be eligible:

• Any small business concern that meets SBA’s size standards (either the industry-based sized standard or the alternative size standard)
• Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
  • 500 employees, or
  • That meets the SBA industry size standard if more than 500
• Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
• Sole proprietors, independent contractors and self-employed persons

Loan forgiveness
As stated earlier, the loan will be fully forgiven if it was used for payroll costs, interest on mortgages, rent and utilities. The employer must maintain or quickly rehire employees as well as maintain salary levels. Forgiveness will be reduced if the number of full-time employees decreases, or if salaries and wages are cut.

Loan payments will be deferred for six months, and neither the government not lenders will charge small businesses any fees. The loan has a maturity of two years with an interest rate of 1%.

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The U.S. Department of the Treasury provides ample application information on this loan, including:

• Overview of the program
• Lender information
• Borrower information
• Borrower application form
• Lender application form
• Frequently asked questions
• Find an eligible lender