Are you a small business owner who has been struggling because of the coronavirus pandemic (COVID-19)? If so, you have plenty of company. The Small Business Paycheck Protection Program was designed to provide small businesses the funds they need to help them cover payroll and benefits, to pay rent, utilities, and interest on their mortgages.
“How do businesses get the funds?” The funds will be in the form of a loan and they will be fully forgiven when the business uses them for rent, interest on mortgages, utilities, and payroll. Because there is expected to be a lot of businesses taking advantage of this program, at least 75% of the funds forgiven must have been used by businesses to cover payroll.
What else do I need to know?
- The loan payments will be deferred for six months
- Personal guarantees and collateral are not required
- No fees will be charged by the government or lenders
What Are the Conditions?
Forgiveness is not automatic; the business has to meet the criteria. For a small business to have their loan forgiven, the employer must maintain or quickly rehire employees and they have to maintain the salary levels. Forgiveness can be reduced if the employer’s full-time headcount declines, or if the employer reduces the employees’ salaries or wages.
“Is my business eligible?” you might ask. All small businesses with 500 or fewer employers are eligible and this includes non-profits, self-employed individuals, sole proprietorships, independent contractors, and veterans organizations.
On April 3, 2020, applications for small businesses were being accepted. As of April 10, 2020, independent contractors and self-employed individuals could apply. Small business owners were encouraged to apply quickly because there is a cap on the available funds.