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
- 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.
- 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.
- 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
- 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.