Paycheck Protection Program: What you need to know

April 24, 2020

What is the Paycheck Protection Program (PPP)?

To help small businesses retain staff and stay in business throughout the COVID-19 crisis, Congress appropriated $349 billion to create the U.S. Small Business Association’s new Paycheck Protection Program (PPP), but due to high demand, PPP funds were exhausted in under two weeks. On Wednesday, April 23rd, Congress passed a relief package adding $320 Billion to the Small Business Administration’s Paycheck Protection Program (PPP) with $60 billion earmarked for community lenders and credit unions. President Trump is expected to sign it on April 24th.

PPP helps businesses with 500 or fewer employees keep their workforce employed during the COVID-19 crisis. Loans can be used for payroll, rent, mortgage interest, or utilities. SBA will fully forgive the loan if all employees are retained and if 75% of more of the money is used on 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.

This loan has a maturity of 2 years and an interest rate of 1%.

How much can I borrow?

Up to $10 million; not more than 2.5x the business average monthly payroll.

How much of the loan will be forgiven?

In order to be fully forgiven, you must retain all employees. In addition, 75% of more of the loan must be used on payroll. If you are unable to retain all employees, you will be required to repay a portion of the loan.

How do you apply?

Get started now! The first round of funds went very quickly; this round is likely to go fast as well. As of morning, April 24th, SBA has not reopened the application. However, if you intend to apply, you can get started with your financial advisors NOW to get ahead of the game.

Resources for more information: