Please note: This article was posted on April 3, 2020 and its contents are subject to change. Please refer directly to the SBA’s website for up-to-date information and changes to the available funding.
The Paycheck Protection Program is a loan from the Small Business Administration (SBA) that helps small businesses keep their workforce employed during the COVID-19 pandemic.
The Paycheck Protection Program, or PPP, was signed into law on March 27, 2020 and takes effect on April 3, 2020. The PPP loan is intended to “directly incentivize” small business owners to maintain employment and payment of their workforce. Here are eight of the most frequently asked questions from small business owners.
Who qualifies for the loan?
A small business with fewer than 500 employees—that was in business on or before February 15, 2020—can qualify for the loan if it has been affected by COVID-19.
How much is the loan?
The loan can be up to $10 million dollars, but the amount each business receives takes into account your payroll costs and other business expenses.
What can it be used for?
The loans can be used for several payroll-related expenses including salary, wages, commissions, payment of vacation, sick, parental/family/medical leave, payment of retirement contributions, group health coverage premiums, and state and local taxes assessed on payroll.
What is the interest rate?
The interest rate (as of April 3, 2020) is 1%. According to the bill, the rate may increase but cannot increase to more than 4%.
When do I need to pay it back?
The loan needs to be paid back within two years, but payments are deferred for the first six months.
Can it be forgiven?
Loans can be forgiven if they are used to continue or reinstate employment—though stipulations apply. Small businesses may be eligible for forgiveness on certain qualifying expenses which may include payroll costs, rent, interest on mortgage debt, and utilities.
How can I apply?
Small businesses can apply through the Small Business Administration. Visit https://www.sba.gov/paycheckprotection/find to find an approved lender. The program will be available through June 30, 2020.
Where can I find more details?
Small Business Administration’s Funding program portal
Thanks for reading our article posted on April 3, 2020. Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. See more small business resources or check your current rate in 3 minutes.