Paycheck Protection Program

The Paycheck Protection Program (“PPP”) is a multi-billion dollar federal program that allows the Small Business Administration to make loans, through SBA-certified lenders, to small businesses, independent contractors, gig workers, and non-profit organizations. In an effort to incentivize borrowers to retain (or rehire) employees and maintain their compensation, PPP loans used for certain qualifying expenses are forgivable. Forgivable payroll costs include salaries, wages, commissions, tips, severance, group health care benefits, and vacation, parental, or sick leave, capped at $100,000 per individual. However, the forgivable amount will decrease if the employer does not (by June 30, 2020) restore employees that were laid off, furloughed, or took significant pay cuts. The amount of a PPP loan will vary from business to business, but is generally 2.5 times the amount of payroll costs for the year prior to application (up to $10MM). PPP loans do not require collateral or a personal guarantee, have no application fee, an interest rate of 4% or less, and any repayable portion is subject to a ten year term from the date the borrower applies for loan forgiveness. PPP loans are in high demand, and some lenders have already stopped taking applications, so it is best to act now. If you or your business has questions about the Paycheck Protection Program, please contact our office at (517) 351-3550.