To our Valued Clients and Associates,
The U.S. Treasury has released a Fact Sheet and the application form for the Paycheck Protection Program. The Fact Sheet contains some important changes and updates to the program.
Here are some highlights of the Fact Sheet they released along with the application. You can access the Fact Sheet here. You can access the application form here.
- There are two application dates depending on what type of entity you are. Small businesses and sole proprietorships can apply beginning this Friday, April 3. Independent contractors and self-employed individuals can apply beginning on Friday April 10.
- You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender to see if they are participating.
- You will need to provide payroll documentation to your lender so they can calculate the maximum loan amount on your behalf.
- Loan Payments will be deferred for 6 months.
- The loan interest rate is .50% fixed and the term is 2 years. This is new, previous language stated interest could be up to 4% and the term could be up to 10 years.
- The Loan will be forgiven as long as
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and
- Employee and compensation levels are maintained (see below)
- Due to demand, they are anticipating that at least 75% of the forgiven loan amount may be used for payroll costs. This is an important change from the original information, which did not have this requirement.
- Loan forgiveness – the amount forgiven will be reduced if
- You decrease your full-time employee headcount.
- You decrease salaries and wages by more than 25% for any employee who made less than $100,000 annualized in 2019.
- You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15 and April 26.
This is a very trying time for everyone and there is bound to be extremely high demand for these loans. Please be patient with your lender as they work with you to help obtain the necessary funds. We are here to help as best we can and answer any questions you may have. As always, be safe and stay healthy. We will get through this together!