If you’re a small business, you’re already well aware that making money during these statewide stay-at-home policies has been a challenge, if not impossible. On top of the obvious issues that came when you closed your doors, you’re likely trying to keep your employees paid during this time. While it’s the right thing to do to stop the spread of the coronavirus pandemic, businesses everywhere are drowning. But starting today, the government is offering a helping hand. Small businesses can now apply for and receive loans to cover payroll and certain expenses from Small Business Administration (SBA) lenders.
The new Paycheck Protection Program authorizes as much as $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 health crisis.
What is the Paycheck Protection Program?
On March 27, President Trump signed the CARES Act into law, which provides billions in relief for small businesses and workers. As part of CARES, the Paycheck Protection program is offering loans to small businesses that in many cases will be fully forgiven.
Features of the program include:
- Payment deferment for six months,
- No collateral or personal guarantees needed,
- No fees from the government or lenders, and
- The same loan terms for every business.
Loan forgiveness is based on the following:
- Use of the funds: Loans will be fully forgiven when used for payroll costs, interest on mortgages, rent, and utilities. The goal is to help Americans keep their jobs, so at least 75 percent of the forgiven amount must have been used for payroll.
- Employees: Loan forgiveness is based on whether an employer maintains employee head counts and existing pay rates, or quickly rehires employees and maintains their pay rates.
For more information from the SBA, to find a lender, and to read about other types of relief for businesses, click here. Act quickly, as loans will be issued on a first come first serve basis.
Who is Eligible for the Paycheck Protection Program?
The program is for small businesses with fewer than 500 employees. Some businesses may have more than 500 employees if they meet the SBA’s size standards for their industries. For example, small businesses in the hospitality and food industry with multiple locations may still be eligible if each location employs fewer than 500 people.
Free Advice for Small Businesses from Milestone
If you have a small business and need help with the Paycheck Protection Program loan process, feel free to contact Milestone at (716) 883-1833 or firstname.lastname@example.org. Our experts are not charging anyone for this advice.
A West Point graduate where he served as captain and military aviator, John Bair continues his commitment to our country through his efforts within the settlement planning industry. He has represented families of victims lost in the Flight 3407 crash, offered pro bono services to the families of 9/11 victims and drafted the first consumer protection bill for plaintiffs (H.R. 3699).