CARES Act – Paycheck Protection Program (PPP) Loans

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was enacted, which provides a $349 billion lending program to be administered through the Small Business Administration (SBA). Unlike traditional SBA loans, however, these loan funds may be forgiven in whole or in part if they are used for specific business expenses, including most importantly payroll costs. In addition, there is no requirement that the borrower post any collateral to secure the loan.

  • What the Program Offers and Eligibility Requirements:
    • Loans up to 2.5 times an employer’s average monthly payroll with a maximum of $10 million.
    • Full or partial forgiveness of the loan funds that used to pay certain expenses, most importantly payroll costs.
    • No collateral required.
    • Available to any “small business concern” currently eligible to receive SBA 7(a) loans.
    • Available to any business with up to 500 employees (and certain large businesses subject to SBA approval).
  • Loan Terms
    • Maximum Interest Rate of 1%
    • 6 month deferral of repayment of principal and interest.
    • 2-year term
    • Forgiveness of loan proceeds used for payroll costs, mortgage interest, rent, and utilities.
    General Conditions for Entitlement:
    • Operational by Feb, 15, 2020
    • Meet SBA small business size standards
    • Use Funds for Approved Costs and Expenses.
  • Eligible Use of Funds:
    • Payroll Costs
    • Insurance
    • Rent
    • Mortgage
    • Utilities
    • Interest on any other debt obligations that were incurred before the covered period
  • Prohibited Use of Funds:
    • Employee/owner salary over $100,000
    • Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
    • Compensation of employees living outside of the U.S.
    • Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

For more information, please contact:

Ramsay M. Whitworth
Mark Edelson
Steve Leitess
Ilona Shparaga
Michael J. Levin

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