The U.S. Department of Treasury provided additional guidance on March 31, 2020 on the CARES Act Paycheck Protection Program (7(a) loans). Please see the borrower fact sheet put out by the Treasury found here. Below is a summary of the information.
Regarding the other financial assistance, the Economic Injury Disaster Loans and Loan Advance, as soon as more information is available, I will send an update.
Paycheck Protection Program (7(a) loans)
When You Can Apply for The Program
- April 3 for small businesses and sole proprietorships.
- The application can be found here.
How to Use Loan Proceeds
The Guidance updates what you can use loan proceeds on to:
- Payroll costs including benefits;
- Interest on mortgage obligations incurred prior to February 15, 2020;
- Rent, under lease agreements in force prior to February 15, 2020; and
- Utilities, for which service began prior to February 15, 2020.
Forgiveness
The Guidance clarifies that for forgiveness, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Loan Terms
- Interest rate: 0.5% fixed rate.
- Maturity: 2 years.
Who Needs to Sign the Application?
- For a sole proprietorship, the sole proprietor;
- For a partnership, all general partners, and all limited partners owning 20% or more of the equity of the firm;
- For a corporation, all owners of 20% or more of the corporation;
- For limited liability companies, all members owning 20% or more of the company; and
- Any Trustor (if the Applicant is owned by a trust).
The borrower fact sheet put out by the Treasury can be found here.
The lender fact sheet put out by the Treasury can be found here.
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