The application for the Payroll Protection Program loans was released on March 31, 2020 at https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

The CARES Act stimulus for small businesses includes Payroll Protection Program loans that, if used for certain covered purposes, are nonrecourse and forgivable. We understand the loan funds will be mostly on a first come first served basis, and it is expected that demand will quickly outstrip supply.

Here are a few parameters:

• You must have had employees that you paid salaries and submitted payroll taxes as of February 15, 2020. It applies to businesses with 500 or fewer employees.
• For profit businesses, nonprofits, independent contractors and sole proprietors can qualify.
• There is no collateral requirement, and the amount spent on allowable uses can be forgiven.
• You can borrow up to 2.5x your average total monthly payment for payroll.
• Loan proceeds can be used for: “payroll costs” (a defined term under the Act), mortgage interest, rent, utilities, and other debt obligations incurred before the covered period. Tipped employees payroll can be included.
• Payroll amount is capped at $100,000 per employee, prorated for the covered period (February 15 – June 30, 2020).
• Maximum maturity of 10 years.
• Interest rate not to exceed 4%.
• At least 6 months deferral of principal and interest (up to 1 year in certain circumstances).
• No prepayment penalties.
• Borrower must certify:
• The uncertainty of the economic climate necessitates the loan
• Funds will be used for “covered expenses”
• No other similar loan applications
• Between February 15, 2020 and December 31, 2020 recipient has not received and will not receive other similar loans

The loans will be funded through SBA approved lenders and other lending institutions that qualify, and not the federal government. We recommend that you seek assistance from your current lender soon; and hopefully they are keeping you apprised as well. Please see https://home.treasury.gov/cares for more information.

Know that GKH and I are here to help our clients in good times and bad! Please do not hesitate to contact me if you have any questions or need any legal assistance. Good luck out there and stay safe!

David M. Elliott is a Partner at Grant, Konvalinka & Harrison, P.C. where he provides strategic counsel to small and medium sized businesses and individuals. He can be contacted at 423.933.2731 or delliott@gkhpc.com. This blog is not intended to create an attorney/client relationship or provide legal advice. Please contact the author if you have any questions or comments regarding the subject matter.