As of April 27, the Small Business Association has resumed accepting Payment Protection Program applications from participating lenders.
The Paycheck Protection Program provides a direct incentive for small businesses to keep workers on the payroll. The SBA will forgive loans if borrowers keep all employees on the payroll for eight weeks, and they use the money for payroll, rent, mortgage interest, or utilities.
Interested applicants can apply through any existing SBA 7(a) lender or any federally insured depository institution, federally insured credit union, and participating Farm Credit System institutions. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
Click here for FAQs for lenders and borrowers.
So, who can apply? According to the SBA, the following businesses affected by the coronavirus (COVID-19) may be eligible:
- Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons
At least 75% of the forgiven amount must be used for payroll. Loan payments will be deferred for six months, and neither the government nor lenders will charge small businesses any fees.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. If full-time headcount declines or salaries/wages decrease, the borrower will see a reduction in forgiveness. This loan has a maturity of 2 years and an interest rate of 1%.
Find a copy of the PPP borrower application form here.
View a list of lenders participating in the Paycheck Protection Program as of April 23, 2020.