On April 2, the Treasury Department released the application for employers affected by the coronavirus outbreak to seek a forgivable loan to cover payroll costs through the Paycheck Protection Program.
The Payroll Protection Program, which started April 3 for small businesses, is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed on March 27 by President Trump.
Under this program, which is administered by the Small Business Administration (SBA), qualifying employers with up to 500 employees can acquire a forgivable loan to cover payroll costs for an eight-week period within the span of Feb. 15 to June 30, 2020.
Highlights of the Paycheck Protection Program:
While April 3 was the general start date for businesses with up to 500 employees to apply for a forgivable Paycheck Protection Program loan, independent contractors and self-employed individuals can apply for the forgivable loans starting April 10.
The Treasury encouraged businesses to apply as soon as possible—because total funding for the paycheck program is limited to $349 billion.
All SBA-certified lenders can process Paycheck Protection Program loans, as indicated in an information sheet for lenders. A list of SBA-certified lenders is available from the SBA’s list of lenders by state.
Although the CARES Act authorized the loans to have an interest rate of up to 4%, the loans have a fixed interest rate of 0.5%. Any amount of the principal of a loan acquired through the Paycheck Protection Program that is not forgiven would need to be paid within two years of receipt.
Resources
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