SBA Provides Loan Application Forms for Paycheck Protection Program
The stimulus bill signed into law by the President recently has set aside substantial funds to aid small businesses under a new loan program that is now in effect. If small businesses maintain payroll during this economic crisis, all or part of the money borrowed through the newly created Paycheck Protection Program can be forgiven. The goal is to help small business owners and their employees ride out this economic storm.
The Department of Treasury is taking immediate action and has released the Paycheck Protection Program Application and other supplemental information on its website. Small businesses may also review the section on Assistance for Small Businesses. CMDA encourages our clients to review all four documents listed under the “Assistance for Small Businesses” section, specifically the application and accompanying borrower guide.
Contact your local banker to discuss the lender guide and policies to ensure that you become aware of program requirements. While it is our understanding that virtually all banks and credit unions will be able to process program applications, you should verify that your bank intends to support the program. As a reminder, funds from this program:
- May be used for employee salaries under $100,000; paid sick or medical leave; insurance premiums; and mortgage; rent and utility payments.
- Are 100% forgivable if used for the above purposes; and
- Are available to businesses or 501(c)(3) non-profits with less than 500 employees, including sole-proprietors, independent contractors, and other self-employed individuals.
Borrowed money used for expenses relating to payroll, mortgage interest, rent, or utilities in the eight weeks following the date of origination can be forgiven. Business owners will not have to pay the government back the full principal amount of the money borrowed. Borrowers will need to provide documentation of these expenses in their loan forgiveness application. A decision on forgiveness of the Paycheck Protection Program loan will be made within sixty (60) days of forgiveness submission.
While the application and documentation requirements are simple, make sure you review all the applicable documents and also look into other Small Business Administration loan programs that are available. It is an incredible opportunity for small businesses, contractors, and self-employed individuals to continue their operations during this difficult time. A forgivable loan like this should help small businesses retain payroll during the coming weeks when they are likely to watch revenue drop.
CMDA is committed to assisting our clients and others in this process. Please do not hesitate to contact us to discuss your options. We look forward to working with you during this challenging time while our country continues to work together to return to normal business operations once again.
Christopher G. Schultz is an equity partner, the managing partner of the Firm, and a member of the Executive Committee. He works out of our Livonia office and concentrates his practice on business law, real estate law, and estate planning. He maintains an AV Preeminent Rating from Martindale-Hubbell, which is the highest possible rating an attorney can achieve for both ethical standards and legal ability.
He represents and counsels manufacturers, financial service institutions, and small and large businesses in the retail and service sectors in many areas, including entity election, start-up issues, shareholder and owner relationships, employment matters, mergers, acquisitions, real estate matters, and business succession planning. Mr. Schultz is also a Certified Public Accountant (CPA).
He may be reached at (734) 261-2400 or firstname.lastname@example.org.