The Paycheck Protection Program is a loan from the Small Business Administration designed to provide a direct incentive for small businesses to keep their workers on the payroll during the COVID-19 pandemic.
SBA will forgive loans if all employees are kept on payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
The Paycheck Protection Program will be available through June 30, 2020, and lenders began processing loan applications on April 3.
This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons). The loan will be fully forgiven if the funds are 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). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. 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. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan has a maturity of 2 years and an interest rate of 1%.
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are currently eligible to apply for disaster assistance. Enhanced Debt Relief is also available in SBA’s other business loan programs to help small businesses overcome the challenges created by this health crisis.
For more info or to apply or view the application forms go to www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
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