The Coronavirus Aid, Relief and Economic Security (CARES) Act included the Paycheck Protection Program which allocated $350 billion to help small businesses impacted by the pandemic. This program, which is overseen by the Small Business Administration (SBA) includes emergency loans for qualifying businesses.
There have been some clarifications offered regarding the specifics of borrowing under this program. Here are the main things you need to know before you apply:
- 1099 workers (Independent Contractors) cannot be included in the Average Monthly Payroll calculations. These individuals can apply for their own emergency loan starting on April 10th.
- The 2019 calendar year is the recommended time frame for determining average payroll costs. There are exceptions for new and seasonal employers. The application form has instructions for these special circumstances.
- The actual interest rate of loans under this program is 1%.
Please note, some banks are using this updated application form issued by the Treasury Department.
Keep in mind, this emergency loan program is being offered on a first-come-first-serve basis. So, the quicker you apply, the more likely you are to get funds. And if you’ve already filed an application, you may want to update it in order to prevent possible delays.
We will continue to monitor the situation and update you with information as it is made available.
The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.