06 Apr SBA issues details for Paycheck Protection Program loans
The CARES Act payroll loan program went into effect this week, through the SBA. Our team has been asked to provide a few clients with the information needed to apply.
Here are the general basics of the program:
- You can obtain a loan for up to two months of your average payroll costs, plus 25%. Payroll includes health care and retirement benefits.
- Payroll is capped at $100,000 per employee.
- The interest rate is 0.5%, due in two years.
- Loan forgiveness will be given, provided you are able to document using the loan for the first two months for payroll costs, mortgage interest, and rent payments.
- When you apply, you have to list all owners who own more than 20%.
- There is a series of questions to ensure you and all of the owners are honorable, law-abiding citizens.
Michigan also has a program for business grants and loans.
On April 10th, independent contractors and self-employed individuals can apply for and receive loans to cover similar costs.
PPP loans will be available through June 30 or until the funds run out. Due to expected high demand, Treasury recommends that applications be submitted as soon as possible. The application can be found here on the Treasury site, along with details for borrowers and lenders.
And, like anything else with the Coronavirus, it may be subject to change and intense scrutiny down-the-road. As of Friday, April 3rd, it appears to us that banks are putting their own customers first, so its best to go through your own bank if possible.