Latest Information on SBA PPP Loans
SBA Payroll Protection Plans Loans (PPP)
Latest Information as of April 9, 2020
In order for the amount borrowed to be forgiven, borrowing businesses must meet the following requirements:
They must maintain current employment levels and compensation levels
The monies borrowed must be used to pay for specific items, including rent or mortgage interest, utility costs, and most importantly payroll costs over the 8 weeks following the granting of the loan
Sole proprietor businesses and other small businesses will be able to begin applying for and receiving loans from existing SBA lenders on April 3, 2020. These loans are meant to cover payroll and other specific expenses.
Self-employed individuals and independent contractors will be able to begin applying for and receiving loans from existing SBA lenders on April 10, 2020. These loans are meant to cover payroll and other specific expenses.
Who is eligible to apply for these loans?
The Paycheck Protection Program specifies that businesses with 500 or fewer employees can apply: this broad category includes sole proprietors and self-employed individuals, nonprofit and veterans’ organizations, independent contractors and Tribal business concerns alike.
Expenses, no more than 25%, can be allocated for the utilities, mortgage or rental costs. Businesses that apply for and accept the loan without the required maintenance of staff and payroll will be required to repay the loan, with the terms of that maintenance strictly defined as follows:
Decreasing full time employee headcount will result in a reduction of loan forgiveness
Decreasing salaries and wages of any employee that made less than $100,000 annualized in 2019 by more than 25% will result in a reduction of loan forgiveness
Failure to restore full-time employment and salary levels for changes made between February 15, 2020 and April 26, 2020 will result in a reduction of loan forgiveness
Is loan forgiveness automatic?
No. To be approved for forgiveness of your loan you are required to provide the lender servicing your loan with a request that verifies all payments of allowable expenses under the Paycheck Protection Program, as well as the number of full-time equivalent employees and their pay rates.
Upon submission you must also certify the veracity of the information you’ve provided and confirm that the loan amount was used for the allowable expenses. The decision about whether the loan will be forgiven must be made within 60 days.
What are the terms of the loan?
Interest on the loan has been set at a 1% fixed rate, with all payments deferred six months if necessary. It should be noted that deferral does not eliminate the accrual of interest. The loan is due two years after it is granted, though repayment can be made ahead of time with no prepayment penalties or fees. Borrowers need not pledge collateral and no personal guarantee is required either.
How can we help you?
If you are planning to apply for the PPP, or have any questions about the program, please contact us ASAP. There will be a high volume of applicants and we are here to help you through the process. We can help you wade through the SBA finance options and collect financial data needed to apply for the assistance. Alliance 1099 is available to walk your business through this process.