SBA Issues Additional Guidance on Paycheck Protection Program
On March 31, the SBA issued additional guidance related to the Paycheck Protection Program, including a sample application and borrower and lender “fact sheets.” While full guidelines and procedures are to be expected through an update to the SBA’s
Standard Operating Procedures document, new forms have been released, including a
Borrower Fact Sheet, a
Lender Fact Sheet and a
Sample Loan Application.
To overview some of the key changes from the first wave of further guidance:
- Interest rates will be 0.50% fixed rate (from the up to 4% prescribed in the CARES Act).
- The term of the loan will be 2 years (from the up to 10 years prescribed in the CARES Act).
- In determining how much of the loan can be forgiven, “payroll costs” must constitute at least 75% of the forgiven amount. Non-payroll costs (qualifying mortgage interest, utility costs and rent) may constitute no more than 25% of the forgiven amount.
- Payroll costs are capped at $100,000 for each employee. The application of payroll costs compared to salaries and wages was previously uncertain in the CARES Act.
- Beginning on April 3, 2020, small businesses and sole proprietorships may apply for and receive loans.
- Beginning on April 10, 2020, independent contractors and self-employed individuals may apply for and receive loans.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.