The Paycheck Protection Program: Potomac Law

Small businesses impacted by the coronavirus crisis may be eligible for assistance under The Paycheck Protection Program [PPP], part of the Coronavirus Aid, Relief, and Economic Security Act just passed by Congress. The PPP is a low interest, emergency loan program, with potential for loan forgiveness, designed to enable employers to retain employees and cover overhead costs.

This Alert provides a brief summary of the PPP for our small business clients. Additional details can be found on the US Chamber of Commerce’s website. If we can help, please don’t hesitate to reach out.

Who is Eligible for the Paycheck Protection Program?

Small businesses or non-profits with fewer than 500 employees
Sole proprietors, Independent Contractors, Self-employed individuals
Tribal businesses
Small 501(c)(19) Veterans organizations

What are the terms of a loan?

Maximum interest rate: 4%
Maximum loan amount: up to $10 million
Term: 10 years, no prepayment penalty
No fees, collateral or guarantees
SBA approval not required before loan is made
Repayment deferred for 6 months to 1 year
Full and partial forgiveness of loan is possible

Can all or part of the loan be forgiven?

The SBA may forgive the amount a borrower spends in the first 8 weeks after receiving the loan, on the following:

Salaries, commissions, and benefits
Covered rent, and interest payments on mortgages and utilities

The amount of forgiveness decreases if a borrower lays off employees or reduces wages.

What is required to obtain the loan?

Find an SBA Approved Lender using SBA’s Lender Match and apply
Certify that the current economic conditions make the loan necessary for ongoing operations
Certify that there is not a similar application pending and that the business did not receive a similar loan this year.

What is the timeframe for applying?

We encourage our clients to gather all information now so that they can apply as soon the SBA and banks are ready to process applications. Not only will the SBA be overwhelmed with applications, but there is a limited amount of money available that will be distributed on a first-come, first-serve basis. Potomac Law Group has a number of long-standing relationships with many national, regional and local banks and other financial institutions offering SBA loans and would be glad to assist.

To learn more about the issues raised by this client bulletin, please contact Greg L. Ewing at gewing@potomaclaw.com and Eliza Hall at ehall@potomaclaw.com

Note: This bulletin is for general use and should not be construed to provide legal advice as to particular factual situations.