Dear Friends, Clients and Colleagues,
We pray our newest COVID-19 informational update finds you and yours safe and healthy.
In response to numerous inquires, this update focuses on details on the SBA Paycheck Protection Program.
President Trump signed a bold and unprecedented third emergency relief package. The CARES Act provides roughly $2 trillion in aid — including sending checks directly to individuals and families, supporting key distressed industries and small businesses.
Starting Friday, April 3rd, small businesses with 500 or fewer employees—including nonprofits, may apply for Small Business Administration loan funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.
For a top-line overview of the program CLICK HERE.
Self-employed individuals, sole proprietorships, and independent contractors can apply starting next Friday, April 10th.
You will need to complete the Paycheck Protection Program loan application and submit the application with the required payroll documentation to an approved lender that is available to process your application by June 30, 2020. The application for borrowers can be found HERE.
You 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.
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All payments are deferred for 6 months; however, interest will continue to accrue over this period at a 0.50% fixed rate.
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No collateral or personal guarantees are required. ***However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.***
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Loan is due in 2 years. There are no prepayment penalties or fees.
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SBA is waiving the requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).
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All loans will have the same terms regardless of lender or borrower.
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Neither the government nor lenders will charge small businesses any fees.
Fully Forgiven: Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).
Must Keep Employees on the Payroll—or Rehire Quickly: Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
Although the program is open until June 30, 2020, SBA encourages you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan. If you’re a borrower, more information can be found HERE.
Please stay informed by visiting our Resource Pages on a regular basis, and share with your networks.
Finally, we invite you to follow all of our social media channels for timely updates on COVID-19 news and other important resources.
Feel free to reach out with questions!
Stay safe and healthy,
Jorge Luis Lopez, Esq.
Governmental Affairs Attorney