The Paycheck Protection Program, part of the new CARES stimulus package, is a federal loan program aimed at helping small businesses who have been severely impacted by COVID-19.
- The initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward.
- Businesses can borrow up to $10 million, with the loan amount being 2.5X the borrower’s average monthly payroll costs for 2019.
- Covered payroll costs include salary, wages, cash tips, payroll taxes, group health care benefits, insurance premiums, retirement contributions and covered leave.
- At least 75% of the loan proceeds must be spent on payroll costs; the residual 25% can be spent on rent, utilities and mortgage interest.
- The loan has a 2 year maturity and a 1% interest rate. Collateral and personal guaranties are not required.
- Small businesses with fewer than 500 employees, many nonprofits, sole proprietors, independent contractors and self-employed individuals are eligible.
- While the program is open until June 30, the government is advising borrowers to apply as soon as possible.
Due to the overwhelming demand for the Paycheck Protection Program, we are giving priority to current customers. Please contact your lender to apply.