There is no doubt that small businesses across the country are struggling with cash flow in the midst of the COVID-19 pandemic sweeping our nation and the world. Congress recently signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included nearly $350 billion to help aid small businesses affected by the pandemic.
These funds were provided to the Small Business Association, better known as the SBA and will be distributed through their Paycheck Protection Program (PPP) – a modified version of the SBA 7(a) loan program for businesses currently struggling due to the coronavirus (COVID-19) pandemic.
What is the Paycheck Protection Program (PPP)?
This program provides federally-guaranteed loans up to a maximum amount of $10 million to eligibile businesses. These loans can be partially forgivable, with a goal to encourage businesses to retain employees through the current crisis by assisting in the payment of certain operational costs.
Costs the loan is intended to cover include payroll expenses, continuation of group health care benefits, lease payments, mortgage interest payments, utility payments and interest on other pre-existing debt obligations.
If employers maintain their payroll, and meet certain SBA requirements, up to 100% of PPP loan may be forgiven, which would help workers remain employed, as well as, help affected businesses get back on their feet more quickly.
Features of the program
- Loan amount is the lesser of $10,000,000 or 2.5x the total average monthly payroll costs incurred in the 1 year prior to origination date.
- Monthly payments are deferred for between 6 and 12 months.
- The borrower may be eligible for loan forgiveness equal to the amount spent during the 8-week period following the loan origination date on payroll costs, mortgage interest payments, lease payments, and utility payments.
- Any amount not forgiven is converted to a term loan not to exceed 2 years or a maximum 0.50% interest rate.
- The business will be required to attest that the uncertainty related to the COVID‐19 virus has made the loan request necessary to support the ongoing operations of the business.
What businesses are eligible?
Small business, nonprofits, Veterans organizations, Tribal concerns, sole proprietors, self-employed individuals, and independent contractors described in the Small Business Act – with 500 or fewer employees may apply as well as applicants eligible under existing 7(a) program.
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries, such as restaurants with multiple locations with no more than 500 employees per location.
Can I apply for the PPP loan today?
As of Friday, April 3, 2020, SBA will begin accepting PPP loan applications. BLC Community Bank is available to speak with you about SBA’s application requirements and begin the PPP loan application process for your business. The business will have to certify that it was harmed by COVID-19 between February 15, 2020 and June 30, 2020. The PPP loan program is only available until June 30, 2020.
Please contact us with questions at (920) 788-4141
Download our Paycheck Protection Program (PPP) Guide
Get started with the PPP Application
After completing the application please save it to your device, then click here to send a secure email to one of our lenders.
* As new details about the Paycheck Protection Program are released we will provide updates to this article. Information current as of April 2, 2020. BLC Community Bank is a federally insured SBA 7(a) loan program approved lender.