SUMMARY:
Beginning April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing U.S. Small Business Administration lenders.
The Paycheck Protection Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone.
The loan amounts will be forgiven as long as:
- The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made; and
- Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Loan payments will be deferred for six months.
How large can the loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
The U.S. Treasury Department has published a Paycheck Protection Program Information Sheet detailing information for borrowers.
Click here to find the application for borrowers.
AEA COMMENTARY:
The AEA team is actively researching and identifying resources to support the membership, their business and their employees. More information can be found on the AEA COVID-19 resource page available to all members.
FOR MORE INFORMATION:
Contact Ric Peri, AEA vice president of government and industry affairs, by email at ricp@aea.net or by phone at 202-589-1144.