On the evening of March 31, 2020, the Small Business Administration (SBA) released the loan application for the Paycheck Protection Program (PPP) and an information sheet containing loan guidelines. This updates our prior Alert.
Some highlights of the guidelines:
- April 3, 2020: Loan applications will start being accepted for businesses and sole proprietors.
- April 10, 2020: Loan applications will start being accepted for independent contractors and self-employed individuals.
- More lenders will be added as they are approved/enrolled. To apply, you should reach out to one of the approved lenders.
- There are no changes to affiliation standards from those specified in the CARES Act. However, additional guidance may be released by SBA as appropriate.
- All loan terms will be the same for everyone.
- Due to anticipated high demand, SBA anticipates allowing not more than 25% of the forgiven loan amount to be used for nonpayroll costs (utilities, rent and interest on a mortgage).
- Interest Rate: 0.5% fixed rate, lowered from 4%.
- Maturity: 2 years, shortened from 10 years.
We will continue to monitor for additional guidance and will provide updates.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For Further Information
If you have any questions about this Alert, please contact Sandra G. Stoneman, Nanette C. Heide, any of the attorneys in the Private Equity Group, any of the attorneys in the Emerging Businesses Group, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.