Paycheck Protection Program Loans Available as Early as Friday; Details and Application Released
March 31, 2020 by Russ Brown
Four days ago, on March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) into law. The Act includes a $349 billion loan program for small businesses, aptly named the Paycheck Protection Program (PPP). This program, unlike any other in our nation’s history, is designed to keep workers on the payroll with promises of loan forgiveness, removal of collateral/personal guarantee requirements, and low interest rates (.50% fixed rate).
Our law firm has fielded countless calls about the PPP over the past 72 hours as American small businesses and workers anxiously await further details. The internet is filled with efforts to explain the PPP; however, until this afternoon the best explanation we have seen was issued by the US Chamber of Commerce in a simple 3-page infographic (click here to view), which remains worth a look.
Today, the SBA provided its first round of substantive details on the Paycheck Protection Program, which includes a sample application for businesses to prepare in anticipation of preparing an actual application with banks participating in the SBA PPP program. Likewise, the Treasury Department posted details on its website today; however appears to have also shared the official PPP application. Business owners should expect questions about prior SBA loans, criminal history, citizenship, and bankruptcy, to name a few. Business owners will also be required to make certifications confirming economic uncertainty related to COVID-19, use of funds, and that documents and statements are truthful.
Recommendations & Key Details:
- If you own a business with 500 or fewer employees, including sole proprietorships, independent contractors, and self-employed persons, immediately look into this program.
- If you are a private not-for-profit organization, immediately look into this program.
- Hospitality and food industry businesses with more than one location could be eligible at the store/location level. Look into this program at the store/location level if beneficial.
- Even if your company has over 500 employees, if your business meets specific industry standards, you may be eligible.
- Prepare your application now.
- Get your supporting payroll documentation together; your lender will ask for it.
- Once approved, ensure you document all payments you will later submit for verification for loan forgiveness.
- Know your loan will be due in two years.
- According to the Treasury Department, small businesses and sole proprietorships can submit applications as early as this Friday, April 3, 2020.
- The same source reports that on April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans.
- The PPP will be available until June 30, 2020, although there is sure to be a rush to submit applications.
- Ensure your bank is participating in the SBA program. If not, establish a relationship with an eligible bank now.
- Other options
- If your business does not qualify, consider the other loans available through CARES, as well as SBA disaster loans.
We are in unprecedented and challenging times, but we are in it with you. If our attorneys at Brown Fox can help you in any way, whether legal advice or introductions to banking relationships, please reach out anytime.