Treasury Issues Guidelines, Application Form for SBA Paycheck Protection Program

Posted: Apr 01 2020

The Treasury Department has issued much-anticipated guidance for the Paycheck Protection Program, which starting April 3, will provide up to $350 billion in fully forgivable loans to help small businesses maintain payrolls during the coronavirus pandemic. The loans are fully guaranteed by the Small Business Administration, but the SBA will waive all SBA guaranty fees. PPP loans are made for two years at a 0.5% fixed rate with payments deferred for six months.

To underwrite PPP loans, lenders will need to verify that the borrower was in operation on Feb. 15, 2020, and that it had employees for whom it paid salaries and payroll taxes. The lender will also have to verify the dollar amount of average payroll costs. The SBA will not review loan applications, according to a senior administration official, but lenders will receive an SBA loan number and verify that the applicant has not already received a PPP loan.

The SBA will pay the lender a processing fee calculated on the loan balance, ranging from 1% for loans of over $2 million to 5% for loans of $350,000 or less. PPP loans may be sold in the secondary market, and the SBA will not collect fees for guarantees sold. The guidance includes fee caps for agents assisting with loan applications.

Small businesses and sole proprietorships—generally, those with 500 or fewer employees—may apply for PPP loans starting on Friday, April 3; independent contractors and self-employed workers can apply starting April 10. PPP loans will be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities, with at least three quarters of the forgiven amount being used for payroll; forgiveness is based on employers maintaining headcount or quickly rehiring and maintaining salary levels.

To view the info sheet for lenders, visit: https://home.treasury.gov/system/files/136/PPP%20Lender%20Information%20Fact%20Sheet.pdf

To view the info sheet for borrowers, visit: https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf

To view the application form, visit: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf

To read more, visit: https://home.treasury.gov/cares