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You are here: Home / News / $349 Billion Small Business Paycheck Protection Program Applications Open Today

$349 Billion Small Business Paycheck Protection Program Applications Open Today

April 3, 2020 By CollisionWeek Editor

Following President Trump’s signing of the Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced that the SBA and Treasury Department have initiated a mobilization effort of banks and other lending institutions to provide small businesses with the capital they need.

SBA PPP loan program iconThe CARES Act established a new $349 billion Paycheck Protection Program to assist small businesses with fewer than 500 employees.

One week later, banks are rolling out applications today for the new $349 billion Paycheck Protection Program. Small businesses can take out these loans and can get some or all of their loans forgiven.

The loan program will help small businesses with their payroll and other business operating expenses. It will provide critical capital to businesses without collateral requirements, personal guarantees, or SBA fees – all with a 100% guarantee from SBA. All loan payments will be deferred for six months. Most importantly, the SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

More information is available online at the SBA website.

The new loan program will be available retroactive from Feb. 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.

Loans under the Paycheck Protection Act can be 2.5 times the borrower’s average monthly payroll costs, and they cannot exceed $10 million. The interest rate for Paycheck Protection loans are set at 1% and loans mature after two years. No personal guarantee or collateral is required. The lenders are expected to defer fees, principal and interest for no less than six months and no more than one year. The SBA notes that all loans will have the same terms regardless of lender or borrower.

SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

You can apply through any existing SBA 7(a) 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 as to whether it is participating in the program.

Filed Under: News Tagged With: Coronavirus, Paycheck Protection Program, U.S. Small Business Administration

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