PPP LOAN FORGIVENESS
Small businesses severely impacted by coronavirus. There are more than 30 million small businesses in the U.S. that employ roughly 120 million people. The shelter-in-place mandates by many states and other jurisdictions due to the COVID-19 outbreak have posed an economic hardship on many of these businesses. Although a nationwide call to stay at home has not been declared as of April 1, estimates are that roughly 75 percent of the nation, or at least 250 million people, were under orders to shelter in place. The declarations have put a significant portion of small employers, independent contractors, the self-employed and nonprofits out of work. Many have had to temporarily close, laying off or furloughing staffs, which has resulted in unemployment claims soaring nationwide. Without income many of these businesses will have a hard time covering rent and mortgage payments, which will negatively impact lenders and property owners over the coming months. The recently passed CARES Act contains provisions to help small businesses.
The Paycheck Protection Program (PPP) offers assistance. The PPP is a $349 billion fund that is aimed to prevent job loss and the failure of small businesses because of the COVID-19 crisis. The program will deploy funds on a first come, first served basis, so businesses are urged to apply quickly. The program will provide forgivable loans to businesses with less than 500 employees and the loans are to be used by employers to pay their employees for up to eight weeks, including benefits, during the coronavirus pandemic. Borrowers can receive loan amounts for up to two months of their past year’s average monthly payroll cost plus an additional 25 percent of that sum, although there is a $10 million cap for each business. The loan proceeds can also be used to pay rent, utilities and interest on mortgages.