Paycheck Protection Program (PPP)
The SBA’s Paycheck Protection Program (PPP) is a broad lending program providing 100% federal guaranteed, forgivable loans to small businesses who maintain their payroll during the COVID-19 emergency. Adopted as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the PPP allocates $350 billion for the SBA to provide businesses of under 500 employees with loans of up $10 million to cover qualified payroll costs, mortgage/rent, and utility payments. The SBA recently announced that the interest rate on these loans is .5% with no payments due for the first 6 months. Notably, these loans can be forgiven in whole or in part the extent borrower is able to maintain average monthly headcount and payroll during the eight-week period following the origination of the loan (as compared to pre-determined prior period). Payroll Protection Plan lending will be administered by the SBA through outside lenders participating under the existing SBA 7(a) lending program. There are limitations in participating in the PPP for borrowers who have already received an SBA’s Economic Disaster Injury Loans.
Many SBA participant lenders are expected to begin processing these loans online soon with the SBA scheduled to release implementing regulations on April 3rd. https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
