Apply Friday for small business Paycheck Protection Program

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Applications open Friday for a new federal program created to help small businesses keep employees on the payroll amid coronavirus pandemic shutdowns.

Congress created the $349 billion Paycheck Protection Program to provide small businesses with loans that can be forgiven if the companies maintain their headcounts and pay levels, or quickly rehire employees cut after Feb. 15.

“We want to make sure that you can handle your bills, pay your rent and make sure your employees stay connected to your business,” U.S. Rep. Kathy Castor, D-Tampa, said in a video after the program was approved.

But demand is expected to be high and funds are limited, so applying early will be key.

With money “allocated on a first-come, first-served basis,” watch for funds to be “quickly taken up by business owners with savvy financial advisors/accountants who are urging them to apply and walking them through the process,” Stony Brook University economics and public policy professor Stephanie Kelton tweeted.

The program will provide small businesses with loans to pay up to eight weeks of payroll costs including benefits. Funds also may be used to pay interest on mortgages, rent and utilities.

Because of the high demand, federal officials anticipate that at least 75 percent of the amount loaned must be used for payroll costs for the loans to be fully forgiven. Payroll costs will be capped at $100,000 for each employee on an annualized basis. Loans are capped at $10 million per business.

Loan forgiveness will be based on an employer maintaining or quickly rehiring employees and maintaining salary levels. The amount forgiven will be reduced if full-time headcount goes down or if salaries and wages are cut.

“Make sure you keep records of what you use this money for,” Florida-based Small Business Administration business opportunity specialist Ray Lewis told more than 300 businesses on a webinar Wednesday afternoon.

For any balance not forgiven, the loans will carry an interest rate of 0.5 percent and will be due in two years, with all loan payments deferred for six months. No collateral or personal guarantees are required to apply, and neither the government nor private lenders will charge fees for the program. All loan terms will be the same for everyone, according to the U.S. Department of the Treasury.

The program is open to businesses with 500 or fewer employees, including non-profit and veterans organizations, tribal concerns, self-employed individuals, sole proprietorships and independent contractors. Businesses with more than 500 employees are eligible in certain industries.

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Applications will open Friday for small businesses and sole proprietors.

Starting April 10, independent contractors and self-employed individuals will be able to apply.

Businesses will be able to apply through any existing Small Business Administration 7(a) lender or through any participating federally insured depository institution, federally insured credit union and Farm Credit System institution. A list of participating lenders as well as additional information and full terms can be found at sba.gov.

For more information on the Paycheck Protection Program, check home.treasury.gov/system/files/136/PPP--Fact-Sheet.pdf

For an application, check here home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

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