Skip to content

What You Need to Know About SBA’s Paycheck Protection Program Loans

To help small businesses navigate the affects of COVID-19, the Department of the Treasury released guidance on the Paycheck Protection Program at the SBA – fully forgiven loans that pay up to 8 weeks of payroll costs including benefits. 

Please note that this situation is evolving rapidly: demand for these loans is anticipated to be massive – and some banks are uncertain if they are prepared for the launch of the program. 

The most recent guidance, released March 31, includes the following key provisions:

  • Fixed loan terms of 2 years and a set 0.5% (50bps) interest rate. Banks must follow these terms.
  • 75% of forgiven loan amount must go to payroll (this is a new requirement and not in the law)
  • Small businesses and sole proprietorships can apply through a bank beginning April 3, while independent contractors and self-employed individuals can apply beginning April 10 (this was not in the law)
  • Non-SBA lenders will be added as soon as they are approved by SBA and Treasury
  • The limitation on non-profits to only c3 organizations is not found in the guidance
  • Average payroll costs for 2019 (x 2.5), not the previous 12 months, will be used for loan size calculation
  • Loan size is significantly less generous than legislation: benefits are included in $100,000 cap per employee and cap is now firmly set at $100,000 regardless of calculation
  • Payments to 1099s are now unclear as being allowed for loan size or forgiveness
  • As predicted, but now confirmed, companies have until April 26 as safe harbor for reduction of salary or headcount
  • Interest will accrue (at 0.5%) during loan period, but is deferred for 6 months (unclear if interest is due if all of loan is forgiven)
  • 2019 tax documents will be used determine loan size

Additional Resources: 

As always, 3C is committed to ensuring small business success, and we will continue to issue updates as they occur.

Join 3C to get the latest news and resources for your small business

We respect your Privacy
This field is for validation purposes and should be left unchanged.
Privacy Policy
Copyright © 2024, Connected Commerce Council