Paycheck Protection Program (PPP) Overview

Legal Article

Paycheck Protection Program (PPP) Overview

An SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.


Program Overview

The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.

Moreover, SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

The Paycheck Protection Program will be available through June 30, 2020.

Who Can Apply

First, this program is for any small business with less than 500 employees. Secondly, this includes sole proprietorships, independent contractors and self-employed persons, private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.

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. Moreover, this means each store location could be eligible.

How to Apply

You can 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 lenders that receive federal regulation will be available to make these loans. However, they must wait until they receive approval to enroll in the program. You should consult with your local lender as to whether it is participating in the program.

Lenders may begin processing loan applications as soon as April 3, 2020.

Loan Details and Forgiveness

The loan will be fully forgiven if the borrower uses funds for payroll costs, interest on mortgages, rent, and utilities. Moreover, at least 75% of the forgiven amount must be use for payroll). There is a deferment process for loan payments for six months. the loans also do not require collateral or personal guarantees. Neither the government nor lenders will charge small businesses any fees.

First, forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Secondly, borrowers can reduce forgiveness 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%. 

Other Assistance

In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are currently eligible to apply for disaster assistance.

Enhanced Debt Relief is also available in SBA’s other business loan programs to help small businesses overcome the challenges created by this health crisis.

For information on additional Lending options, please click here.

SBA provides local assistance via 68 district offices and a nationwide network of resource partners. To find resources near you, please click here