I wanted to share today was some initial information we are learning about the PAYCHECK PROTECTION PROGRAM. The PPP is in Title 1 of the recently passed CARES Act, below you will find the key points of interest for businesses. This information is just starting to be shared with the Lenders, lots more to come: • The PPP program will be administered through banks, unlike the Disaster Relief Program that is being administered directly through the SBA. • The intent is that these loans will eventually be “forgiven” by the U.S. Government and will end up being grants. • Loan Amount = 2 ½ times the average monthly payroll for the last 12 months – up to a maximum loan amount of $10MM. Maximum allowable salary per employee is $100M/year. We can include up to $100M, just not any amount exceeding $100M. • Other allowable uses (in addition to payroll expenses) include: o Paying interest on obligations o Overhead costs • The applicant had to be in business on Feb. 15th, 2020. • Size standards – 500 or fewer employees. • No collateral requirements. • No personal guarantee requirements. • Borrower will have to certify that these funds will be used to pay payroll. We will have to document our loan file with this certification as well as best document their average payroll calculation used to determine loan size. • Borrower will also have to certify that they haven’t applied for another PPP loan through another lending institution. • No guarantee fees for these loans. • Verification that the client could not obtain credit elsewhere is being waived for these loans. • Interest rates on these loans are not to exceed 4%. • No payments will be due from borrowers for a minimum of 6 months or a maximum of 12 months. Not a payment deferral, but the U.S. Government will be paying these loan payments for Borrowers. • There will be no prepayment penalties on loans administered under this program. • Businesses will not be able to get 2 loans from the program for the same purpose. • Loans need to be originated by June 30th, 2020. We don’t know if there will be a special or abbreviated application for this program. Right now the application is a mountain of paperwork. Again, this is all revolving on an hourly basis. But I hope this information will help you. Most of all, I hope that this program will save jobs and help us rebound from this (hopefully temporary) recession. -Bill Hammett (Bill@hammetthealth.com)
“Congress intended the Paycheck Protection Program to accomplish two fundamental goals: 1) help small businesses cover their near-term operating expenses during the worst of the crisis, and 2) provide a strong incentive for employers to retain their employees. ”