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News & Press: NVLA News

Paycheck Protection Program Opens Friday

Thursday, April 2, 2020   (0 Comments)
Posted by: Marcie Liebert
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SBA Issues Guidance for the Paycheck Protection Program

Loan Applications Accepted Starting April 3

 

The Small Business Administration (SBA) recently provided guidance to lenders and borrowers on the Paycheck Protection Program (PPP), an SBA loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.

 

Below are key details about the program. NVLA members are encouraged to consult with their local SBA district office and their lenders with any questions they may have regarding the program.

 

What is the Paycheck Protection Program?

The program provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency.

 

If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the COVID-19 crisis.

 

Who Can Apply?

This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

 

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.

 

How Do I Apply?

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.

 

Consult with your lender as to whether it is participating in the program.

 

When Can I Apply?

Lenders may begin processing loan applications as soon as April 3, 2020.

 

If you wish to begin preparing your application, you can download a sample form to see the information that will be requested from you. 

 

The PPP will be available through June 30, 2020. NVLA members interested in the program are encouraged to apply as soon as possible.

 

What are the Loan Terms?

This loan has a maturity of two years and an interest rate of .5%.

 

Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

 

How Does Loan Forgiveness Work?

The PPP loan program offers loan forgiveness up to 100% of the loan amount.

 

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).

 

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

 

What are Allowable Uses of Loan Proceeds?

  • Payroll costs
  • Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
  • Employee salaries, commissions, or similar compensations (see exclusions above)
  • Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)
  • Rent (including rent under a lease agreement)
  • Utilities

 

Who Should I Contact if I Have Questions?

NVLA members are encouraged to view the SBA website and consult with their local SBA district office and their lenders with any questions they may have regarding the program.

 

*This message was sent by NVLA as a service to our members based on information from government websites. The NVLA will rely on its members to conduct additional research to assure all information is accurate and timely.*



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