On April 2, 2020, the Small Business Administration issued guidance on the Paycheck Protection Program contained in the recently enacted Coronavirus Aid, Relief, and Economic Security Act (a/k/a the CARES Act). The Paycheck Protection Program will provide up to $349 billion in loans to eligible small businesses (generally a business with fewer than 500 employees), independent contractors, and self-employed individuals to cover payroll and other costs. Key highlights of the Paycheck Protection Program include:
-100% of the loan's principal may be forgiven if borrowers satisfy certain conditions.
- The loans will have a two-year term with payments deferred for six months.
- The loans will carry an interest rate of 1%.
- The loans will be in the amount of the lesser of $10 million or an amount calculated on a specified payroll-based formula.
More information, including eligibility criteria, can be found in the guidance issued by the Small Business Administration. [INSERT LINK https://content.sba.gov/sites/default/files/2020-04/PPP--IFRN%20FINAL.pdf]
The application process for the Paycheck Protection Program opened officially on April 3, 2020 but several banks are still in the process of developing procedures to accept applications. The funds are available on a first come first serve basis.
The attorneys at FactorLaw will continue to monitor legal and regulatory developments to assist clients during the current crisis.