Overview
The goal of the Paycheck Protection Program (PPP) is to keep workers employed during the Covid-19 national emergency pandemic. This program provides loan forgiveness for qualifying spending during the crisis.
The goal of the Paycheck Protection Plan is to prevent a prolonged recession as we had back in the housing crisis in 2008-2009 that took many years to recover. What we learned from that crisis was to keep people from becoming unemployed in the first place. When employees get laid off some never return to work and many end up taking different jobs. In both cases the economy slows down dramatically.
Who Qualifies
Most companies with fewer than 500 employees, sole proprietors, independent contractors and self-employed individuals can apply for the PPP loans.
The program lenders will want to make sure you were in operation before February 15, 2020. They also want to know that the loan is necessary to support you continuing as an ongoing operation.
It does not matter if you were unable to get credit elsewhere. Also you will not be required to personally guarantee the loan or provide any collateral.
How to apply
Most FDIC insured banks and institutions will soon be familiar with the Paycheck Protection Program (PPP) loans. Institutions that are already Small Business Administration (SBA) lenders would be the obvious immediate best source for these loans. These loans are expected to be available through June 30, 2020.
If you feel you might qualify for these loans I recommend contacting your local SBA regional office for assistance. They can provide direction to the program lenders in your area.
The Best Part
The best part is that these loans may be forgiven if the borrower maintains their payrolls during the crisis. Qualifying payments also include rent and utilities.
The amount forgiven would cover an eight week period beginning with the origination of the loan. The amount being forgiven could be reduced if you layoff employees and don’t bring them back during the required period.
The unforgiven portion of the loan, if any, would be at an interest rate not to exceed 4% and a term no longer than 10 years. The loans also don’t have any fees attached to them.
A good brief document that breaks down the program at a high level is provided by the U.S Chamber of Commerce. Click here for access to that guide.
If you are a business owner or small proprietor you could benefit directly from this program. If you are an employee and you are worried of a potential layoff, or have already been laid off, I recommend providing the US Chamber guide or a link to this article to your Human Resources department or business ownership. The purpose of this generous program is to keep people employed!
Best of luck to you during these very difficult times!
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