Just last week a new program was put in place under the CARES act, called the Paycheck Protection Program (PPP), which is a 7(a) loan for small businesses. This program allows small business to maintain their normal business operations, protect their employees, and provide temporary relief for rent and mortgage payments.
As part of the of our three-part FUND EDU Series with Polsinelli Law, this session explored how to seek capital during these uncertain times. Philip Feigen and Sara Ainsworth, from the Washington D.C office, covered everything you need to know about the new Paycheck Protection Program.
We put together some short clips for you to review. Or, if you’d like to watch the full session, the full video is posted at the bottom.
Who is eligible for the Paycheck Protection Program?
Any small business is eligible. The way you test if you’re a small business is to look at NAICS Code to see what you’ve classified your business to be OR you have less than 500 employees.–Philip Feigen, Office Managing Partner, Washington, D.C.
What are the PPP forgiveness stipulations?
The maximum amount eligible for loan forgiveness is the sum of your payroll costs, rent, utilities and payment on mortgage interest in the 8 weeks following origination of the loan. Watch to see how it’s calculated.Sara Ainsworth | Associate | Polsinelli, Washinton, D.C.
What’s the borrowing limit and is there collateral?
– You can borrow up to $10 million based on 2.5 times your average total monthly payroll cost.
– There is no collateral and no personal guarantee that’s associated with these loans.
– If you take the loan and parts of it aren’t forgiven because you don’t need the task for forgiveness then it turns into a 2 year loan with low rate 0.5 annual interest ratePhilip Feigen | Office Managing Partner and Shareholder | Polsinelli Washinton, D.C.
… and how can I apply?
The application is now available on the SBA Treasury Department website. Here’s a few things to know about application:
1. All 20% holders of your business will need to sign the application and attest to any criminal activity and that they are a US citizen or resident
2. Must create a chart that lists all your affiliates- those who control you by either 50% or more ownership OR ability to effect management/ board of directorsPhilip Feigen | Office Managing Partner and Shareholder | Polsinelli Washinton, D.C.