CARES ACT Paycheck Protection Program
By Luz Padron
Published on March 31, 2020
On Friday, March 27th, 2020, Congress approved the Coronavirus Aid, Relief and Economic Security Act (CARES Act), which is designated to provide comprehensive relief to individuals and businesses following the unprecedented impact of COVID-19 on our communities. The CARES Act created a new program within the U.S. Small Business Administration’s (SBA’s) flagship 7(a) Loan Program called the Paycheck Protection Program (PPP). The goal behind this program is to allow businesses to meet ongoing vital expenses, such as payroll, utilities, rent, and mortgage interest.
Banesco USA is well positioned and ready to support you in this time of need.
Here are some important things you need to know about the Paycheck Protection Program:
- Eligible participants are permitted to borrow up to $10 million under the PPP (covered loans) from February 15th, 2020 through June 30th, 2020 (covered period).
- Eligible participants:
- Sole-proprietors, independent contractors, and other self-employed individuals
- Companies with less than 500 employees or the applicable SBA size standard for the industry per the NAICS
- Non-profits and Veterans Organizations
- The proceeds can be used for:
- payroll support, including paid sick, medical or family leave, and costs related to the continuation of group health care benefits during those periods of leave
- employee salaries
- mortgage, lease and utility payments and
- any other debt obligations that were incurred before February 15th, 2020
- Documentation needed (preliminary):
- 2019 Business Tax Return or Financial Statements as of 12/31/2019
- 2019 Payroll Cost
- Payroll Cost from period 01/01/2020 – 02/15/2020
- Business Certificate / License
- Business Lease if applicable
- Application Requirements:
- that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the applicant;
- acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments;
- that the applicant does not have an application pending for a loan under the PPP for the same purpose and duplicative of amounts applied for or received under a covered loan; and
- during the period beginning on February 15, 2020, and ending on December 31, 2020, that the applicant has not received amounts under the PPP for the same purpose and duplicative of amounts applied for or received under a covered loan.
- The PPP contains loan forgiveness provisions, under which the SBA will forgive loans made under the program. The forgiven amount will be equal to the amount actually paid for payroll costs, salaries, benefits, rent, utilities, and mortgage interest during the eight weeks following disbursement of the loan. Additional wages paid to tipped employees under Section 3(m)(2)(A) of the Fair Labor Standard Acts may also be forgiven. The forgiveness amount is subject to reduction if there is a workforce reduction or a reduction in the salary or wages of an employee.
- No Pre-Payment Penalty
- No personal guarantees or collaterals are required