CARES Act – Guidance on Paycheck Protection Program
On March 31, 2020, the Department of Treasury released preliminary guidelines (“Guidelines”) for prospective participants in the Paycheck Protection Program (“PPP”), a cornerstone of the newly enacted CARES Act. Per the publicly released Information Sheet, small businesses and sole proprietors are eligible to apply for a PPP loan starting on Friday, April 3, 2020, and independent contractors and self-employed individuals can submit applications starting on Friday, April 10, 2020. Among other things, the Guidelines serve to specify the terms of PPP loans, fixing the interest rate at 0.5% and setting a two-year term for outstanding amounts not otherwise forgiven. The computation of “payroll” costs is to be based on 2019 data, not the trailing twelve months (with the exception of seasonal borrowers with a different period). As recited by the CARES Act, proceeds of any PPP loan should be used to fund payroll costs, interest on mortgage obligations incurred before February 15, 2020, rent under lease agreements in force before February 15, 2020, and utilities for which service commenced prior to February 15, 2020. For additional detail, our comprehensive client alert on the PPP and other components of the CARES Act is available here.
Funds available under this program are capped and are expected to be in high demand. Interested applicants should apply directly through a designated SBA lender as soon as permissible, by completing the Paycheck Protection Program Application Form linked here.
Our attorneys are ready and available to assist with the PPP, and other Federal, State and local loans and relief. Please contact us with any questions or for assistance.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.