Letting go of some of your amazing and hard-working staff is a very tough call for any business, especially in these difficult times. Now, there is some relief announced by the government as part of their $2 Trillion Relief package. If you had to let go of your employees in the last couple of weeks in an effort to stay afloat during these uncertain times, please read on. The US government today announced the Paycheck Protection Plan (PPP) to help small businesses keep their payrolls going. This is a loan that helps businesses pay their employees during the COVID-19 (Coronavirus) crisis.
- This loan will be fully forgiven if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. This loan will be available through June 30, 2020
- 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.
- 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 0.5%.
- Govt will be paying the lenders directly so SMBs don’t have to repay these loans.
Eligibility:
- A company 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.
- Small businesses in the food and hospitality industry with multiple locations could be eligible at the store or location level if the store employs less than 500 workers. This means each store/location could be eligible.
How to Apply for this loan:
- Apply through any existing and participating SBA 7(a) lender, any federally insured depository institution, federally insured credit union, and Farm Credit System institution.
- Contact your local lender today!
- Application forms will start processing as soon as April 3, 2020.
In the next article, I’ll be summarizing Economic Injury Disaster Loans and Loan Advance. Stay Tuned!