Payment Protection Program – What you need to know

As of today, Friday, April 3, 2020 small businesses can apply for government help as part of the $2 trillion economic stimulus plan approved by Congress and signed by President Trump last week, the CARE Act. Part of this Act is the Paycheck Protection Program, providing $349 billion in loans for small businesses. This program is administered by the Small Business Administration (the “SBA”) supported by the Treasury Department. The program tries to provide relief for small businesses to keep their employees and whether the storm. The loans can be for up to two months of the average payroll costs from the last year plus an additional 25% of that amount.

These loans are forgivable - though you must request forgiveness - as long as:

1. The loan is used to cover payroll costs, most mortgage interest, rent, utility costs over the 8 weeks period after the loan is made; and

2. Employee and compensation levels are maintained

Because of the expected high number of applicants, it is expected that not over 25% of the forgiven amount may be for non – payroll costs. The loans will be deferred for 6 months.

Who can apply? And how many loans?

Only one loan. Businesses with 500 employers or less. This includes:

- Small businesses

- Sole proprietorships

- Self- employees individuals

- Independent contractors

- Non – profits

- Veteran organizations

- Tribal business concerns


For this program, SBA affiliations size standards are waived for small businesses in the 1. Hotel and food service industries; or 2. That are franchises in the SBA’s Franchise Directory; 3. That receive financial assistance from small business investment companies licensed by the SBA.

When can you apply?

- Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and expenses through SBA lenders

- Starting April 10, 2020, independent contractors (1099) and self – employed individuals can apply through existing SBA lenders

- Other regulated lenders will be available to make these loans once approved

Where to apply?

Apply through FDIC lending institutions, SBA lenders (banks), federal insured credit union, and Farm Credit System institution that is participating. See, for a list of lenders.

What do you need to apply?

- The application:

- Payroll documentation.

Note: The application needs to be completed and submitted to an approved available lender by June 30, 2020. This is the timeline the program is open, however, apply as quickly as possible because there is a funding cap and lenders need time to process the loan.

Interest rate: 1.00 % fixed rate; due in 2 years, though it can be paid before; no collateral is required and no personal guarantee.

If information changes, we will keep you updated as it becomes available. Call Attorney Dismondy at 734.746.5006 should you need assistance.

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