Are you an employer who has been facing cash-flow challenges due to the COVID-19 pandemic? Today’s blog is one of interest to you as it will discuss a loan program that could allow you to keep employees working and help cover the cost of payroll.

The SBA has a program called the Paycheck Protection Program and it is designed to provide an incentive for entrepreneurs to keep their workers on the payroll. Although a loan, the amount will be forgiven if all employees are kept on the payroll for eight weeks and the funds are used for payroll, rent, mortgage interest, or utilities.

The program is available through June 30, 2020.

Who Can Apply?

This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.

Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.

How To Apply

Contact your bank or other federally insured financial institution to see if they are participating in the program. Lenders may begin processing loan applications as soon as April 3, 2020.

Loan Details and Forgiveness

The 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). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

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.

This loan has a maturity of 2 years and an interest rate of .5%.
If you wish to begin preparing your application, you can download a sample form to see the information that will be requested from you.