Friends and Clients:
Attached is a “Sample Application Form” for the Paycheck Protection Program (“PPP”), posted today by the Small Business Administration. Your SBA lender may not use this exact application – or may require a supplemental application, but completing this now is a good head start. It had been reported that businesses could start applying for PPP loans this coming Friday, April 3, 2020. There is a chance that some banks will take applications sooner.
To the extent you don’t know, the PPP is a program providing loans (through SBA lenders) to businesses. A key feature is that some or all of the money borrowed will be forgiven, depending on several factors, mostly including how many full time employees the business retains during the crisis. (Determining how many employees were ‘retained’ involves a comparison of a pre-crisis time period and a post-crisis time period . . . and an employee must not have his or her pay reduced by more than 25% to be considered retained.)
The amount a business can borrow is 8 weeks of average payroll (over a set time period) plus 25% of that amount. The money can be used for payroll, rent, mortgage and a few other expenses. In addition to the possibility of the principal being forgiven (or partially forgiven), repayment can also be deferred. There is no requirement of a personal guarantee, but the may be personal liability if the proceeds are used for an improper purpose.
The foregoing is a very basic summary for those who knew little about the program. The attached FAQs provide much more information. You’ll need to study the terms to learn how the program will apply to your business.
We wish you the best of luck during this challenge.