SBA Guidance and Application for PPP Loans

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) became law, and will provide more than $2 trillion in economic relief in response to the COVID-19 pandemic. An important component of the CARES Act is the Paycheck Protection Program (“PPP”) which authorizes immediate forgivable loans to allow small businesses to maintain pre-pandemic payroll levels. On March 31, 2020, the SBA released initial guidance and an application for PPP loans, with an expected April 3, 2020 start date for submission of applications/funding of PPP loans. Further information can be found here: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp. The initial guidance provides the following for PPP loans:

Loans will be forgiven if funds are used for payroll costs, interest on mortgages, rent and utilities;
Because of expected volume, 75% of forgiven amount must be used for payroll;
Loan payments will be deferred for 6 months;
No Collateral;
No Personal Guarantees;
No Fees;
Forgiveness based on maintaining current headcount/salary levels; and
Unforgiven portion, if any, will have a maturity of 2 years and an interest rate of 0.5%.

Applications can be made to any existing SBA 7(a) Lender or other participating financial institution. The SBA Attorneys at Lewis Kappes continue to monitor the developments to SBA programs and the CARES Act as a result of the COVID-19 pandemic. For more information regarding the CARES Act, or any other matters related to the SBA or matters concerning your business, contact: Chris Poling at cpoling@lewiskappes.com.

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