Paycheck Protection Program (PPP) Policy Brief

Paycheck Protection Program (PPP) Policy Brief

The PPP is a program implemented in order to keep people on the payroll of small businesses. This program is a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act that Congress recently passed. Under this program, $349 Billion in forgivable loans will be available to small businesses who pay their employees during the Covid-19 health crisis. Below is important information on the program.

Who can apply?

  • All businesses with 500 or fewer employees can apply.

When do applications open?

  • April 3rd, 2020 – Small businesses and sole proprietorships

  • April 10th, 2020 – Independent contractors and self-employed individuals

When does the program end?

  • June 30th, 2020

Where can you apply?

  • You can apply at any existing SBA lender or through any federally insured depository institution, federally insured credit union, and farm credit system institution that is participating.

How much can you receive?

  • Loans can be for up to two months of average monthly payroll costs from the last year plus 25% of that amount. There is a $10 million cap for the loan. Additionally, payroll costs will be capped at $100,000 annualized for each employee.

What can the loan be used for?

  • Payroll costs, including benefits

  • Interest on mortgage obligations, incurred before February 15, 2020

  • Rent, under lease agreements in force before February 15, 2020

  • Utilities, for which service began before February 15, 2020

What is the interest rate for the loan?

  • The current interest rate for the loan is 1%. The new interest rate changed on April 3rd, 2020. The original rate of the loan was .5%.

Loan Forgiveness

  • When the loan is used for eligible expenses (see above) the loan will be fully forgiven. Payments are deferred for six months and no collateral is needed.

  • At least 75% of the forgiven amount must be used for payroll costs.

More information:

PPP application here /  PPP Information sheet from U.S. Treasury here  / SBA PPP webpage here