Relief for Small Businesses, The CARES Act Paycheck Protection Program

The Coronavirus Aid Relief and Economic Security Act (CARES) was approved on March 27, 2020, mandating help not only for individual tax-paying Americans but also for small businesses. 

 

Under the $2 trillion CARES Act, the Payroll Protection Program (PPP) has designated $349 billion for small business loans to aid businesses impacted by the effects of the coronavirus. Your business may qualify. Here’s what you need to know.

Who qualifies for this loan?

All businesses with 500 or less employees are able to apply for the loan. This includes nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors.

What can I use the loan for?

The PPP loan can be used to cover payroll, rent, mortgage interest, and utilities. Rental agreement, mortgages and utility services must have been established prior to February 15, 2020. 

Is this loan forgivable?

The full loan will be forgivable if the money is used for payroll costs, mortgage interest, rent and utilities payments from the eight week period after receiving the loan. Per the U.S. Treasury Department, “due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.” In addition, you must maintain your staff during the eight week term or the forgivable amount of the loan will be reduced if you let go of any full-time employees. The forgivable amount will also be reduced if any employee making less than $100,000 receives a pay cut. 

When can I apply?

As of April 3, 2020, small businesses and sole proprietorships can begin applying for the loan.  Starting April 10, 2020 independent contractors and self-employed individuals can apply. 

How do I apply for this loan? 

You can apply for the loan through a Small Business Administration approved lender. You can contact your financial institution directly to inquire if they are participating and to get the process started.

Additional information

  • 1.00% fixed interest rate
  • All payments are deferred for 6 months
  • The loan is due in 2 years
  • There are no penalties or fees for repaying the loan early.

Where can I find more information as it becomes available?

Check back to this blog post for more information as we find it and post for your benefit.