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Paycheck Protection Program

Paycheck Protection Program

The small business Paycheck Protection Program began accepting applications Friday, April 3, 2020. The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent and utilities.

  • Small Business Administration Information - As noted above additional details from the U.S. Small Business Administration on the Paycheck Protection Program are available here.  Information from the SBA on the PPP and other loan options is available on the SBA Coronavirus Relief Options web page.
    • FAQ for Lenders and Borrowers - This document is being regularly updated with new information.
    • SBA Lender Finder Tool - This tool can be used to find a nearby lender eligible to issue a loan under the Paycheck Protection Program.
    • Interim Final Rule - On April 2, 2020, the U.S. Small Business Administration issued an Interim Final Rule providing guidance on key provisions and the operation of the Paycheck Protection Program under the federal Coronavirus Aid, Relief and Economic Security (CARES) Act.  The Interim Final Rule becomes effective immediately.  The  IFR offers guidance on and outlines the key provisions of the PPP.

Important - The above noted Interim Final Rule has confirmed that PPP loans will be made first-come, first-served, with funds available until they are exhausted. Dealers interested in PPP funding should contact their lenders as soon as possible to secure funding before the appropriated money has been exhausted.

    • Additional Interim Final Rule on Affiliations - The U.S. Small Business Administration issued an additional interim final rule on the application of the SBA's affiliation rules to loan applications under the Paycheck Protection Program (PPP).  The new interim final rule, issued April 3, 2020, supplements the interim final rule issued on April 2, 2020, which provides general guidance on the PPP.  The SBA also released an overview of the affiliation rules.
    • SBA Franchise Identifier Codes - Automotive Manufacturers

 

Fully Forgiven Loans - Funds are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, 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.

Must Keep Employees on the Payroll or Rehire Quickly - Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining certain salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease by certain levels.

All Small Businesses Eligible - Small businesses with 500 or fewer employees-including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors are eligible. Businesses with more than 500 employees are eligible in certain industries.

When to Apply - Starting Friday, April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply. Employers are encouraged to apply as quickly as you can because there is a funding cap.

How to Apply - 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. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.