The Small Business Administration’s Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Businesses can apply thru their existing SBA lender. Consult with your local lender as to whether they are participating in the program. All loan terms will be the same for all borrowers.
The loans will be calculated as 2.5 times average monthly payroll for the 12 month period preceding the loan application. Seasonal employers or new businesses will use different applicable time periods for the calculation. Payroll costs will be capped at $100,000 annualized for each employee.
The loan amounts will be forgiven as long as they
- Used to cover payroll costs, mortgage interest, rent and utility costs over the 8 week period after the loan is made; and
- Employee and compensation levels are maintained.
The loan forgiveness amount will be based amounts paid for payroll, mortgage interest, rent and utilities in the 8 weeks following receiving the loan. It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. The business will be required to repay the loan if they do not maintain staff and payroll.
The interest rate on the loan is a fixed 0.5%. This loan will be due in two years and there is no prepayment penalty or fees.