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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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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

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877-999-6442

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