The federal government has implemented the $2 trillion dollar Coronavirus Aid, Relief and Economic Security Act (the "CARES Act") to provide economic relief to businesses affected by the novel coronavirus (COVID-19). The CARES Act created a new program within the Small Business Administration's ("SBA") 7(a) Loan Program called the Paycheck Protection Program. The SBA will be implementing regulations over the coming days on PPP loans which Lalchandani Simon PL will be closely monitoring. The PPP will authorize up to $10 million per business in loans for qualified businesses available up until June 30, 2020. The application itself is not yet live as of the date of this post, and we will be providing updates as the process officially begins.
Who is Eligible for a Paycheck Protection Program Loan?
All qualified small businesses are eligible to receive a covered loan during the applicable period. A qualified small business is one that (1) was in operation on February 15, 2020, (2) had employees for whom the business paid salaries and payroll taxes or paid independent contractors, and (3):
has 500 employees or fewer, whether employed on a full-time, part-time, or other basis; or
meets the SBA’s industry-based “size standard” requirements for the applicable North American Industry Classification System (NAICS) code, which are based either on number of employees or annual receipts, if larger than 500 employees, in which the business operates.
There are certain exemptions to the definition above for independently owned franchises and businesses receiving financial assistance from a Small Business Investment Company.
Also, certain nonprofits, sole proprietors, independent contractors, and self-employed individuals are all eligible for the Paycheck Protection Program.
What Restrictions are in Place on the Paycheck Protection Program?
The CARES Act limits the use of Paycheck Protection Program loans to:
payroll costs, excluding the prorated portion of any compensation above $100,000 per year for any person;
costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
employee salaries, commissions, or similar compensation;
certain payments of interest on any mortgage obligation that existed on or before February 15, 2020;
rent payments;
interest on any other debt obligations ;and
utility payments (incurred in the ordinary course of business commencing prior to February 15, 2020).
Contact Lalchandani Simon for More Information
For more information on whether you are eligible for a loan under the Paycheck Protection Program, please contact Lalchandani Simon PL at INFO@LSLAWPL.COM or call at (305) 999-5291.