As part of the recently enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act, $350 billion has been set aside to provide small businesses quick access to capital for payroll and other overhead costs. The program is referred to as the Paycheck Protection Program and funds are disbursed in the form of a loan with the opportunity for most if not all of it to be forgiven based upon documented uses of the loan. The loan will be administered by an approved lender of the Small Business Administration (SBA). The lender will most likely be the financial institution you use for your practice and you must contact them directly to understand their specific process and information requirements. The program allows for a loan up to 2.5x your average monthly payroll for the previous 12 months. The SBA is still finalizing the application and certain other aspects of the program, but it is anticipated applications will become available this Friday. Given the time-sensitivity of this program we wanted to ensure you are aware of the opportunity.
The following is a summary of the program:
- $350 billion available in program as part of CARES Act.
- Final rules for the application are due to be released Friday, at which time Banks need to finalize their applications for availability to applicants.
- Monies are available on a “first come first served” basis once Banks open up the application process. There is some speculation more money will be added based on demand, but no guarantees.
- No collateral, personal guarantees, fees, or pre-payment penalties. May be a modest application fee.
- Loan applied and administered through a local bank.
- Applicant must meet one of three requirements, one of which is that the applicant has less than 500 employees.
- Loan amount – 2.5x average trailing 12 months of payroll costs including state and local taxes (excludes FUTA and FICA) and benefits.
- Amount excludes compensation in excess of $100k per employee.
- Loan can be used for certain costs including payroll, benefits, mortgage interest expense, rent & utilities.
- All or a portion of the loan can be forgiven if costs over the eight-week period following distribution meet certain criteria tied to maintaining staff and payroll.
- Unforgiven amounts carry a 4% interest rate with the loan payable over ten years, payments deferred for the first six months after distribution.
Chase Bank is offering a Webinar on this program Thursday at 4:00 pm eastern. Although you must be a Chase Bank account holder to apply for the loan through them, all are welcome to participate in the Webinar for educational purposes. You can register for the webinar here. We will keep you updated as more information becomes available.
Stay safe, stay healthy, stay United.