Yesterday afternoon, (Tuesday, March 31) the U.S. Treasury Department released guidance on the Paycheck Protection Program aimed at helping small businesses in our country. There are several key changes to the Paycheck Protection Program that differ from what was initially released. The banking industry is still waiting on final rulemaking from the SBA to determine the exact requirements to make a loan.
We’d like to highlight yesterday’s changes to ensure you fully understand what this loan program entails:
Previously Stated
Annual Percentage Rate 4.0%, Term 10 Years, Forgiveness Payroll, Mortgage, Rent, Utilities
New Guidance
Annual Percentage Rate 0.5%, Term 2 Years, Forgiveness Payroll 100%, but only 25% forgiveness for other eligible expenses.
Forgiveness: You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.
Information Below May Be Out of Date:
Attached is a snapshot of what is available through the Economic Relief Bill passed by Congress from Live Oak Bank. Any community bank that works with SBA type loans can help you with this. The most promising assistance of part of the bill is help with employee payroll which may qualify for loan forgiveness if certain criteria is met. I know some businesses have furloughed their employees and enrolled them in Unemployment, but it’s my understanding as long as you rehire them you may still qualify for the relief loan to pay employees. The link below should take you to our Facebook Page allowing you to see the snapshot document.