What is the Paycheck Protection Program?
The Paycheck Protection Program (PPP), administered by the U.S. Small Business Administration (SBA), is a loan program that originated from the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP aims to help businesses keep their workforce employed during the COVID-19 (coronavirus) pandemic by providing the businesses with eight weeks of cash-flow assistance through 100% federally-guaranteed loans.
Who is eligible for the Paycheck Protection Program?
The SBA determines eligibility based on the following criteria for entities affected by the COVID-19 crisis:
- Any small business concern that meets SBA’s size standards, either the industry based sized standard of the alternative size standard.
- Any business, 501(c)(3) nonprofit organization, 501(c)(19) veterans' organization, or Tribal business concern (Section 31(b)(2)(c) of the Small Business Act) with greater than:
- 500 employees; or
- That meets the SBA industry size standard if more than 500.
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location.
- Sole proprietors, independent contractors, and self-employed persons.
How can I apply for the Paycheck Protection Program?
To apply for the PPP, you will first need to find an existing SBA 7(a) lender or any federally insured depository institution, federally insured credit union, or Farm Credit System that is participating. View a list of approved SBA lenders by state.
Once you’ve found an approved lender, you will need to complete the PPP Loan Application and submit it to your approved lender to process by June 30, 2020. Along with the application, all businesses must provide their lender with payroll documentation.
How large can my loan be?
Loans can be up to 24 months of your average monthly payroll costs from the last year plus an additional 25% of that amount. This amount is subject to a $10 million limit. The Paycheck Protection Program Flexibility Act extended the timeline for businesses to spend the money from two months to 24 weeks. However, if businesses choose to get the loan forgiven after eight weeks, they are still able to do so.
How much of my loan will be forgiven?
To request forgiveness, businesses must submit a request to the lender that is servicing the loan.
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities. Loan recipients are now only required to spend 60 percent of the aid on maintaining payroll, rather than the previous 75 percent rule. Loan payments will also be deferred for six months and no collateral or personal guarantees are required. Small businesses will not be charged any fees by the government or lenders.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
Need more information on the Paycheck Protection Program?
The U.S. Department of the Treasury has provided a PPP Fact Sheet that answers several commonly asked questions regarding the program. Also, be sure to check out Treasury’s PPP Overview as well as the U.S. Senate Committee on Small Businesses and Entrepreneurships’ PPP FAQs for Small Businesses page.
As businesses can only take out one loan under this program, Benefits.gov encourages you to take the Benefit Finder questionnaire and browse the Loans category, filtered by the ‘business loans’ subcategory, to find additional loan programs your business may be eligible for. Also be sure to check out GovLoans.gov, the official government website for government loans, and browse the Business Loans category.
