CARES ACT UPDATE (April 1, 2020): Paycheck Protection Program Application is Released
Laws and regulations are changing rapidly. After the publication of this article they are subject to change. Check back regularly for updates.
Matching the speed exhibited by Congress in introducing and passing the CARES Act, the U.S. Treasury Department and SBA released a first-iteration of the Paycheck Protection Program (PPP) loan application on Monday, March 31st.. As we explained in our original web article, the PPP loan is the new, potentially forgivable, loan program from the SBA. You can access the application at SBA PPP Loan App.
The SBA also issued very basic guidance to both borrowers and lenders. Guidance to borrowers can be viewed at SBA PPP Borrower Overview.
Here are a few highlights from the SBA’s release:
- Eligible businesses consisting of small businesses and sole proprietorships can begin applying starting Friday, April 3, 2020, although some lenders may be working with existing customers to pre-file ahead of that date.
- Independent contractors and self-employed individuals can begin applying one week later, starting Friday, April 10, 2020.
- PPP loan interest rates will be 0.5%. The CARES Act authorizes rates up to 4%, but the Treasury Department has decided to set the rate much lower.
- Maturity of PPP loans will be 2 years from origination. The CARES Act authorizes maturities up to 10 years, but, again, the Treasury Department has chosen to shorten the loan periods to 2 years.
- You can apply for the PPP loan through existing SBA lenders or through any federally insured depository institution, federally insured credit union and Farm Credit System institution participating.
- Other lenders may be offering PPP loans once they are approved by SBA and enrolled in the program.
- All loan payments are deferred for 6 months. The CARES Act provides for deferral up to 1 year, so borrowers will have to make request directly to their lenders for a deferral period beyond 6 months.
Additional guidance will, undoubtedly, be issued. We will continue to monitor as new guidance is issued. Please contact us if you have any questions.