The Treasury Department released the application for the SBA 7(a) Paycheck Protection Program (PPP) loans, which can help small businesses maintain employment through loans that are forgivable over time under the mandated circumstances. They also released a summary guide of the program to help borrowers understand the program’s rules.
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Small businesses and sole proprietors can apply beginning this Friday, April 3
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Independent contractors and the self-employed can apply beginning next Friday, April 10
Applications should be sent directly to Small Business Administration (SBA) lenders, which can be found using a search tool on SBA’s website.
The Paycheck Protection Program is a new program created by the just-passed CARES Act to provide small businesses (500 employees or fewer), sole proprietors, and the self-employed/independent contractors impacted by COVID-19 with loans of 2.5-times their average monthly payroll expenses (up to $10 million) to cover payroll, mortgage interest, rent and utilities for an 8-week period during the crisis.
Employers who maintain payroll levels of at least 75% of their average, and the same number of employees, are eligible for loan forgiveness.
You can learn more about the loan program in NAR’s CARES Act FAQ document and the CARES Act Summary.
“There are still some questions as to whether a small business should include independent contractors in its employee numbers and payroll costs,” says NAR’s Senior Policy Representative, Commercial Issues Erin K. Stackley, Esq. “What we know for certain is that independent contractors can apply for their own 7(a) PPP loans. (NAR is) seeking clarity on that question from the Treasury and the SBA and will have the answer soon.”
NAR will be posting a SBA-Program specific FAQ focusing on the 7(a) PPP loans and the Economic Injury Disaster Loans, which you can apply for here. Businesses can apply for both, but the funds cannot be used for the same purposes — the $10,000 advance grant is not forgiven if you also receive a forgivable PPP loan.
Find NAR’s SBA CARES Act FAQs here.
More information can be found here.
