This is a post I wrote for CDN Creative, and wanted to share here since many of our readers are small business owners and entrepreneurs.
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Last week, I highlighted several resources that are available at the federal and state level for small businesses and entrepreneurs. You can read that post here.
One resource that had yet to be activated was the Paycheck Protection Program. That program is now available. To recap, the Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. Here are a couple of the key highlights and answers to the most common questions about the program. A link to the application is below.
You are eligible to apply for a loan if you are a nonprofit, veterans organization, Tribal business concern, sole proprietorship, self-employed individual, and an independent contractor – with 500 or fewer employees.
Loan amounts can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
The loan will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
- Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. The U.S. Treasury anticipates that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6 months and the terms will be the same for anyone that utilizes the program.
You can use the proceeds from these loans for the following expenses, but expect to pay back part or all of the loan if you use it on non-payroll costs:
- Payroll costs, including benefits;
- Interest on mortgage obligations, incurred before February 15, 2020;
- Rent, under lease agreements in force before February 15, 2020; and
- Utilities, for which service began before February 15, 2020.
To apply for a Paycheck Protection Loan, click here.
The Program will be administered through SBA approved local lenders. To find a local lender, click here.
Applications are available until June 30, 2020.
If you have any questions about the process, please feel free to reach out via email at ashley@cdncreative.com. We are here to help.