04/06/20 – PPP Loan Terms
The Paycheck Protection Program officially opened Friday morning after the SBA provided lending institutions with preliminary guidance late Thursday night. Although banks were not ready to start submitting applications at that point, some were still accepting them into their queues. Others were waiting to accept applications until they had their portals up and running. Even while banks were formalizing their processes, the SBA published additional guidance alongside two additional versions of the application, causing banks to reach out to their customers and request updated submissions.
Here are some of the recent changes/clarifications you should be aware of:
- The interest rate on any portion of the loan that is not forgiven increased from 0.5% to 1.0%.
- The loan payments are deferred for 6 months instead of 1 year.
- Interest continues to accrue during the 6-month deferral period.
- Ownership status was clarified. Anyone owning at least 20% of a partnership, LLC, or corporation is considered an owner.
- The payroll calculation should be based off of average 2019 monthly payroll for non-seasonal workers.
- If you are a seasonal business, the time period is 2/15/19 – 6/30/19.
- If you are a new business, the time period is 2/15/19 – 6/30/19 or 1/1/20 – 2/29/20 (you pick).
- Amounts paid to 1099 contractors were removed from the payroll calculation.
- On 4/4/2020, President Trump did tweet that he “will immediately ask Congress for more money to support small business under the #PPPloan if the allocated money runs out.” Apparently that’s how news is disseminated now…
We will continue to keep you apprised of any updated information as it is released. Please reach out if you have any questions at email@example.com.