As most of you are already aware, as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the federal government recently allocated $349 billion to help small businesses. Yesterday, the federal government released the application form and some supplemental guidance all employers should review.
Beginning on April 3, 2020, small businesses with less than 500 employees can apply for Paycheck Protection Program loans of up to 2.5 times their average monthly payroll costs, not to exceed $10 million. Payroll costs are capped at $100,000 on an annualized basis for each employee.
According to the Small Business Administration, loans will be fully forgiven if funds are used for payroll costs, mortgage interest, rent, and utilities. Forgiveness is based on employers maintaining employees and compensation levels.
Loans have a maturity of two years and an interest rate of 0.5 percent. Loan payments are deferred for six months.
Businesses can apply through any existing SBA lender or through any federally insured depository institution, federal insured credit union, and Farm Credit System institution that is participating. Funding is limited, so apply quickly.
Additional information is available on the Treasury Department’s fact sheet.
If you have any questions, please contact the attorneys at Gardner Skelton PLLC.