LED Shares Details of Payroll Protection Plan
BATON ROUGE – Here’s some notes on the Payroll Protection Plan, forgivable loans and SBA loans from Christopher Cassagne at Louisiana Economic Development:
Paycheck Protection Loan Guidance From the U.S. Chamber of Commerce
With the passage of the CARES Act last week, federal agencies are working to implement the “Paycheck Protection Program” whereby companies with fewer than 500 workers can access forgivable loans from the SBA through their existing lenders. Those businesses that were in operation on February 15 – and paid salaries and payroll taxes for their employees – are eligible. The new loan will be able to fund employee salaries or compensation; the continuation of group health benefits and insurance premiums; rent of payments of interest on mortgages; utilities; and interest on debt obligations incurred before February 15, 2020. The maximum amount of the loan will be the lesser of $10 million or 2.5 times the average monthly payroll based on the prior year’s payroll.
Lenders will have delegated authority to allow the bank to process, close, and service a loan without SBA review. All borrower and lender fees will be waived, along with collateral and personal guarantee requirements. Principal, interest, and fees will be automatically deferred for six months. Businesses that maintain payroll continuity from February 15 through June 30 can request forgiveness on a Paycheck Protection loan. The program provides flexibility for businesses that re-hire workers that were previously laid off. To receive forgiveness, a business will have to work with a lender to document the maintenance of their payroll.
A business can obtain a new Paycheck Protection loan AND an SBA Economic Injury Disaster Loan so long as they are used for different expenses. For comprehensive loan guidance from the U.S. Chamber of Commerce, including information about eligibility, lender questions, calculating payroll costs, and forgiveness, see attached document (US Chamber).
More Information On Forgivable Loans is Coming Soon
Official guidance from the federal government is expected this week on the new “Paycheck Protection” SBA 7(a) loan program, as the Department of the Treasury and SBA begin to advise lenders. We will share all information as we receive it, but all interested businesses are urged to contact their existing lender for details.
Applications Remain Open for SBA Disaster Loans
On March 27, 2020, President Trump signed into law the CARES Act, which provided additional assistance for small business owners, including the opportunity to get up to $10,000 Advance on Economic Injury Disaster Loans (EIDL). This Advance may be available even if your EIDL application was denied or is still pending, and will be forgiven.
If you wish to apply for the Advance on your EIDL, please visit www.SBA.gov/Disaster as soon as possible to fill out a new, streamlined application. In order to qualify for the Advance, you need to submit this new application even if you previously submitted an EIDL application. Applying for the Advance will not impact the status or slow your existing application. If you have questions, you may call 1-800-659-2955.