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Friday, April 3 is the first day small business owners can start applying for loans through the Payroll Protection Program, a part of the $2.2 trillion stimulus package signed into law on March 27.
That program, costing about $349 billion, offers loan guarantees for small businesses, offered through the Small Business Administration and its partner banks.
Specifically, it lets businesses take out loans totaling 250 percent of their average monthly payroll in 2019. If they spend at least 75 percent of that money to pay their workers, they’ll be eligible to have the loans fully forgiven at federal expense. The application is a simple two-page form, plus documentation.
While there still remain a lot of questions regarding the loans, here’s a brief description on the program directly from the SBA:
“The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
“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.
“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 regulated lenders will be available to make these loans once they are approved and enrolled 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. The Paycheck Protection Program will be available through June 30, 2020.”
In addition, here’s a good FAQ on the program.
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