CARES Act: Paycheck Protection Program

We are no longer accepting PPP applications due to the SBA's August 8 deadline.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a relief package passed by the federal government. The Paycheck Protection Program under the CARES Act is a loan program designed to aid small- and medium-sized businesses affected by COVID-19 keep their workers on a payroll. 
The U.S. Chamber of Commerce has released an overview on their website.

The Paycheck Protection Program: What We Know

• Paycheck Protection Program covers the period from February 15, 2020, through August 8, 2020
• The loan program allows businesses suffering due to the COVID-19 crisis to borrow money for a variety of qualified costs related to employee compensation and benefits, including:
  • Payroll costs
  • Continuation of health care benefits
  • Employee compensation (for those making less than $100K) (Guidance has been requested to clarify whether such individuals are totally excluded, or only the amount of their salary or wages over $100,000.)
  • Mortgage interest obligations
  • Rent
  • Utilities
  • Interest on debt incurred before the covered period
• The maximum loan for qualifying businesses will be calculated as 2.5 times the monthly payroll costs, up to $10 million
• The interest rate may not exceed 4%
• Waives the credit-available-elsewhere requirement
• Waives personal guaranty and collateral requirements, BUT
  • Government will have recourse against a shareholder, member or partner of a borrower company if loan proceeds are used for a purpose not authorized by the law

• Companies and nonprofits that employ 500 employees or less, inclusive of all affiliates, subsidiaries and companies under common ownership
  • A greater number based on the size standard applicable to the industry may be considered
• Exceptions may apply to certain companies in the Accommodation and Food Services Industry (NAICS Code beginning with 72) with
  • No more than 500 employees per physical location
• Affiliation rules under 13 C.F.R. 121.103 are waived for any business with less than 500 employees in the Accommodation and Food Services Industry, certain franchise businesses, and small businesses that receive financing through the Small Business Investment Company Act
  • Affiliation rules otherwise apply to determine eligibility
• Business must have been operational on February 15, 2020
• Had employees for whom it paid salaries and payroll taxes or a paid independent contractor

• All or a portion of the loan may be forgivable and debt service payments may be deferred for up to 1 year
• The borrower under the Paycheck Protection Program shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date on
  • Rent
  • Covered employees include those who did not receive, during any single payment period in 2019, wages or salary at an annualized rate of pay in an amount in excess of $100,000. (Guidance has been requested to clarify whether such individuals are totally excluded, or only the amount of their salary or wages over $100,000.)
  • Interest on a mortgage
  • Utility payments
  • Other interest expense on preexisting debt
• The amount forgiven may not exceed the principal of the loan
• Loan forgiveness amounts will be reduced proportionally by any reduction in employees retained compared to the prior year
• Borrowers that re-hire workers previously laid off due to COVID-19 by June 30, 2020, will not be penalized for having a reduced payroll at the beginning of the period