Coronavirus Aid, Relief, and Economic Security (CARES) Act was adopted on 27th March 2020. PPP loans are open to be applied from
- 3rd April for small businesses & sole proprietors
- 10th April for other applicants
Latest version of Application & other details can be viewed by clicking on https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses
Lenders list is available on SBA website i.e.,https://www.sba.gov/article/2020/mar/02/100-most-active-sba-7a-lenders (or) find zip code wise by clicking on https://www.sba.gov/paycheckprotection/find
Qualified Applicants:
- Wide range of small businesses as defined under Small Business Administration (SBA) Act
- Any business with 500 or less employees working in the US
- Non-Profit Organizations with 500 or less employees working in the US
- Veterans Organization with 500 or less employees working in the US
- Tribal business with 500 or less employees working in the US
- Sole proprietors or self-employed individuals and few others as defined in the Act
Affiliation rule states that 500 count is Company-specific but not Branch-specific.
Qualification Rules:
- If your business has been suspended or 50% drop in Revenue.
- Borrower must have been in operation as of 15th Feb 2020.
If one does not qualify for this program, then they may consider applying for Tax Deferral or other programs.
Terms:
- Lesser of $10 Million or 2.5 times of average total monthly payroll costs incurred during the past 1-year
- Interest rate is 1% (as per SBA) from the date of disbursement of loan
- Maturity is of 2 years (as per SBA) period with no prepayment / penalties
- Repayment begins after 6 months from the disbursement of loan
- Certification must be provided by the Borrower that they shall not reapply for another PPP loan in future
Proceeds can be used only for,
- Payroll expenses
- Mortgage / Debt Interest payments in existence as of 15th Feb 2020
- Rent / Lease payments in existence as of 15th Feb 2020
- Utility payments in existence as of 15th Feb 2020
Proceeds cannot be used for,
- Cash compensation in excess of $100,000 during the year per employee
- Taxes
- Non-US employee payroll
- Qualified Medical / sick leave for Covid-19
- Few others as specified under the Act
Guidance on Waver of the loan is expected to come soon but primarily, at least 75% of the loan proceeds must be spent towards Payroll costs. This must be separately applied by the Borrower by providing documentation justifying the usage of loan proceeds for allowable purposes.
