Late yesterday afternoon, the Treasury Department issued guidance concerning the Paycheck Protection Program (PPP), which is part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) which is now in effect.
Starting this week, the loan program will provide funding for up to $350 billion in fully forgivable loans to help small businesses maintain payrolls during the COVID-19 pandemic. The loans are fully guaranteed by the Small Business Administration (SBA), and the process will be coordinated through local banks who are SBA-approved.
Businesses with fewer than 500 employees may apply for PPP loans beginning this Friday, April 3, 2020. Independent contractors and self-employed workers may begin applying April 10, 2020.
The goal of these loans is to assist with short-term cash flow while revenue has slowed. With this, PPP loans will be eligible for forgiveness when used for payroll expenses, interest on mortgages, rent, and utilities, with at least 75% of the forgiven amount being used for payroll. Eligibility for forgiveness is based on the employer maintain certain headcount and/or quickly rehiring and maintaining salary levels.
The SBA has released a sample form that will be required when applying for the loan. You may access the form here.
We are available to help offer guidance on the aspects of this loan program, including the requirements which must be met in order to apply for forgiveness. We have a team in place dedicated specifically to answer questions and help you understand the nuances of the loan program or to answer any other COVID-19 questions.
If you have questions or want to set up a brief telephone consult, please send an email to COVIDRelief@LNLattorneys.com. We will respond right away via e-mail or telephone.
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