Treasury Department Releases Preliminary PPP Guidance and Application

On March 31, 2020, the U.S. Department of the Treasury, which is supporting the U.S. Small Business Administration (SBA) in administering the Paycheck Protection Program (PPP), and SBA issued preliminary guidance on the program and made available the form of application. Further guidance, such as additional modifications of the existing SBA affiliation rules for the program relating to whether employees of a related party are counted in the employee count, may be subsequently released.

• Small businesses and sole proprietorships can apply for a PPP loan beginning April 3, 2020, through existing lenders.
• Independent contractors and the self-employed individuals can apply for a PPP loan beginning April 10, 2020, through existing lenders.

For a list of the 100 most active SBA 7(a) lenders, please click here.

New lenders can apply to the SBA for approval to make PPP loans by submitting their applications to DelegatedAuthority@sba.gov.

The deadline for applying for a PPP loan is June 30, 2020, though you are encouraged to apply as soon as possible as there is a funding cap.

The status of the PPP loan terms is fluid as the interest rate has been updated as of April 2, 2020. We expect these may change up until the time the PPP loans are made. PPP loan terms will be the same for ALL borrowers and, as of April 2, 2020, are as follows:

• Rate: fixed at 1.00%
• Term: two years
• Loan Payments: All interest and principal payments are deferred for six months. However, interest will accrue during this period
• Prepayment Penalties or Fees: None
• Collateral: None required
• Personal Guarantee: None required

We encourage you to contact your existing lender now to alert them you are interested in applying for a PPP loan.

To read the text of the specific information from Treasury and SBA for Borrowers released on March 31, 2020, click here.

To read the latest text of the specific information released by Treasury and SBA for Lenders, click here.

To read the full text of the CARES Act, please click here. To read our earlier client alert on the PPP, please click here.

Please contact Alexis Schostak (248-203-0598), Mary Beth McGowan (202-906-8631, Government Policy Advisor) or your regular Dykema attorney with any questions. We are here to help you and your business navigate this difficult time.

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