The Paycheck Protection Program

The US federal government recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which is designed to address the economic and health impacts of the COVID-19 Pandemic. It includes relief for small and medium sizes businesses that are facing unprecedented challenges during this time. 

You may have heard about the centerpiece of the CARES Act, the Paycheck Protection Program. We've gathered some information and resources that we hope will be helpful to job shops, and answered some common questions. 

What is the Paycheck Protection Program (PPP)? 

It is a $350 billion dollar program to help small businesses with eight weeks of cash-flow assistance through 100% federally guaranteed loans. Loans will be forgiven if all employees are kept on the payroll for 8 weeks and the money is used for payroll, rent, mortgage interest, or utilities. The loan covers expenses dating back to February 15, 2020 through June 30, 2020.

Do I qualify for the Paycheck Protection Program? 

Most likely, yes. The PPP is for businesses with less than 500 employees that are affected by COVID-19, including: 

• Sole proprietorships
• Independent contractors
• Self-employed people
• Private non-profit organizations
• 501(c)(19) veterans organizations 

How do I apply for the Paycheck Protection Program? 

The Small Business Administration doesn't loan the money, they just "back" the loan that the lender provides. You can apply for the Paycheck Protection Program through any SBA-approved lender. You should contact your local lender to find out if they are participating in the program. 

How long will this be available?

You will need to submit your application by June 30, 2020. Lenders are beginning to process loan applications on April 3rd. 

What can I use the funds for?

• Payroll
• Rent and lease payments
• Mortgage interest payments
• Group health care benefits and insurance premiums
• Utilities
• Interest on other debt that was incurred before the covered period.

How much funding can I get?

Up to $10 million. The maximum for any business is 2.5 times the average monthly payroll cost in 2019. 

What are the conditions for loan forgiveness? 

The purpose of the Paycheck Protection Program is to protect paychecks. A reduction in the number of employees or a wage decrease of more than 25% will reduce the amount of the loan that can be forgiven. 

Paycheck Protection Program highlights:

• All small businesses are eligible
• No fees
• Loan covers expenses from February 15, to June 30, 2020
• Loans can be forgiven (you don't have to pay them back)
• No collateral or personal guarantees required
• No loan payments for the first 6 months
• Loan has a maturity rate of 2 years and an interest rate of 0.5%

Sources & Helpful Links

• US Small Business Administration Guide to Paycheck Protection Program 
• Small Business Owner's Guide to the CARES Act
• Full CARES Act Bill from Congress

SBA Documents: 

• PPP Overview
• Lender Instructions
• Borrower Instructions
• Application Form