Here’s what you need to know
By Dianne Lively Yost
While the COVID-19 pandemic has already battered stock markets and played havoc on businesses both at home and across the nation, help from the U.S. Government is on the way. Morgan County small businesses can now apply for Small Business Administration (SBA) Paycheck Protection Program (PPP) loans that are eligible for loan forgiveness. The Federal government has authorized up to $349 billion for the PPP loan program to help small businesses.
The SBA will forgive these PPP loans if: 1) Employees are kept on the payroll for eight weeks; and 2) The money is used for payroll, rent, mortgage interest or utilities. The SBA says that at least 75 percent of the forgiven amount must have been used for payroll.
According to the SBA, the PPP loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. PPP is available through June 30, 2020.
Any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19, may apply for the program.
According to the SBA, small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
While primarily targeting small businesses, the SBA says that businesses in certain industries with more than 500 employees may be approved for the program if they meet the SBA’s size standards for those industries.
Lenders may begin processing loan applications as soon as April 3, 2020.
The SBA website says to: apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Consult with your local lender as to whether it is participating in the program.
In addition, the SBA stipulates that “the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
The SBA says forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. This loan has a maturity of 2 years and an interest rate of .5%.”