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Guidelines on the Paycheck Protection Program

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

The Department of Treasury has released guidelines on the Paycheck Protection Program, and links to the relevant information are below, and Stimulus 4 recovery ideas continue to be discussed.  President Trump discussed the Paycheck Protection Program during his update as well.

Treasury and SBA Release Application and Guidance for Small Business Loans under CARES Act

On March 31, 2020, the U.S. Department of the Treasury and Small Business Administration (SBA) released the application form for businesses to apply for and obtain loans under the Paycheck Protection Program.

This program, established under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), provides $349 billion for small business loans to cover qualified payroll costs; rent; utilities; and interest on mortgage and other debt obligations. To obtain a loan, a qualifying small business should submit an application through an SBA and Treasury approved bank, credit union, or nonbank lender.

Treasury has indicated that applicants can begin obtaining loans from participating lenders as soon as Friday, April 3, 2020 (for small businesses and sole proprietorships).   Independent contractors and self-employed individuals can begin applying April 10.

The SBA website has a list of current SBA lenders.  Other lenders will be available to make loans as soon as they are approved and enrolled in the program.  To apply, borrowers must complete the application (available here) as well as payroll documentation

Treasury also provided additional guidance about the Paycheck Protection Program, which includes the following information:

  • All loans will have a maturity of 2 years and an interest rate of 0.5%.  Terms will be the same for all borrowers
  • The SBA expects high subscription, 75% of the amount forgiven must be used to cover payroll costs.  Only 25% of the forgiveness amount may be used for rent, utilities, and interest on mortgage
  • Eligible loans will be fully forgiven (including interest accruing during the forgiveness period)

Click here to read more on this from Venable’s Consumer Financial Services Practice.

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