Paycheck Protection Loans

Another provision of the CARES Act is the
Paycheck Protection Loan Program (PPP), a new $349 billion program providing forgivable business loans under the SBA 7 (a) loan program. The SBA makes PPP loans through its existing network of 800 banks (new lenders can be authorized to join the program).
These loans will be available soon after the first of April, and a few lenders already are accepting applications.
Paycheck Protection loans can be used for:
- Payroll support (including paid sick or medical leave);
- Employee salaries;
- Mortgage, rent and utility payments;
- Insurance premiums; and
- Other debt obligations (check with your lender for details)
Program Terms
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Your loan amount is based on a formula addressing your payroll costs. For most, the loan amount will be the lesser of: (a) $10 million; or (b) 2.5 times the average total monthly payroll costs incurred in the one-year period before the loan is issued.
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Borrower and lender fees, as well as most underwriting tests, are waived (collateral and personal guarantees are not required).
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The maximum interest rate is 4%.
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Prepayment penalties are prohibited.
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Lenders must defer payments for at least six months.
A PPP loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 75% of the forgiven amount must have been used for payroll.) Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
We also urge you to act quickly if you are interested in a PPP loan. Some reports state that banks will prioritize existing customers over new ones in issuing PPP loans. If so, you should "get in line" at a participating bank for one of these loans. The program expires on June 30, 2020.
Bank Programs
Federal Income Tax Filing and Payment Deadlines Extended
The Internal Revenue Service has extended the 2020 income tax filing deadline for both individuals and businesses to July 15, 2020. Estimated tax payments that were previously due on April 15 likewise are postponed until July 15. If you live in a state that assesses a state income, franchise or business tax, check with your taxing agency to see if state tax payments are likewise delayed. Several states already have aligned their tax payment schedules with the new federal deadlines.
State & Local Economic Assistance Programs
States and municipalities are adding their own economic assistance programs by the day. The best place to check on the status of these is with your state governor's office.
You can find your governor's website, address and contact information on this listing from the National Governor's Association: www.nga.org/governors/addresses.