The Paycheck Protection Program (“PPP”) was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP authorizes up to $349 billion in forgivable loans to small businesses and charitable nonprofit organizations to pay their employees during the COVID-19 crisis.
All businesses and charitable nonprofit organizations, sole proprietorships, self-employed individuals, and independent contractors with 500 or fewer employees can apply. All loan terms will be the same for everyone.
Loan proceeds will be equal to 2.5 times the average monthly payroll costs over the year prior to the making of the loan, up to $10,000,000.
“Payroll costs” are capped at $100,000 on an annualized basis for each employee and include vacation, parental, family, medical, and sick leave; allowances for dismissal or separation; payments for group health care benefits, including insurance premiums; and retirement benefits.
The loan amounts 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.
The Treasury Department has indicated on its Borrower Information Fact Sheet that, due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
- Download the application and accompanying borrower guide; and
- Contact your local banker to discuss the lender guide to ensure they are aware of program requirements. While it is our understanding that virtually all banks and credit unions will be able to process program applications, you should verify that your bank intends to support the program.
We are here to help you understand the PPP and complete your application. Additionally, other Small Business Administration loan programs are available for funding. Call or email your Legacy Professionals LLP representative for guidance.
We will continue to post updated information as it becomes available.
Legacy News Flash 20-7