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Overview of Paycheck Protection Programs

What is the Paycheck Protection Program (PPP)?

The Paycheck Protection Program (PPP) is a loan program focused on encouraging small businesses to keep their worker on the payroll rather than laying them off entirely. The Small Business Association (SBA) has committed to forgiving loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

To obtain the benefits you can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. There are still other regulated vendors waiting to get approval to join the program. The program is available until June 30, 2020.

Who can apply?

The SBA has stated “[t]he following entities affected by Coronavirus (COVID-19) may be eligible:

  • Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)

  • Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:

  • 500 employees, or

  • That meets the SBA industry size standard if more than 500

  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location

  • Sole proprietors, independent contractors, and self-employed persons”

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. Forgiveness is determined by the employer maintaining or quickly rehiring employees and maintaining salary levels. If the number of employees declined, so will the forgiveness. Loan payments will also be deferred for six months with no requirement of collateral or personal guarantee. There are to be no fees associated with procuring and paying the loan.

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