The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has important provisions all businesses should be evaluating right now. The Paycheck Protection Program (PPP) allocates almost $350 billion to help small businesses keep their employees and prevent other losses caused by the COVID-19 pandemic. PPP loans are 100% federally guaranteed and the funds may be used to pay for various business expenses, including payroll, health care benefits, rent, and interest. In general, loan amounts are calculated by multiplying the business’s average monthly payroll costs by 2.5. A borrower of a PPP loan is also eligible for forgiveness of the entire loan amount so long as the borrower follows the PPP’s guidelines and requirements. For instance, the amount of loan forgiveness may be reduced based on a decline in employees or wages. However, loan forgiveness will not be reduced if the employer reverses those declines by June 30, 2020. The SBA will be providing additional guidance to lenders and borrowers in the coming days.
The other loan package offered by the SBA at this time is the Economic Impact Disaster Loan, or EIDL. This loan also provides companies with a working capital loan of up to $2,000,000, on favorable rates and terms who have suffered a substantial economic injury related to the COVID-19 pandemic. There is no need for your company to be without working capital for the next several months. Clyde Snow attorneys are ready to answer your questions about how the Cares Act and the PPP can help you and your business during these difficult and changing times.