Paycheck Protection Program (PPP)

The Paycheck Protection Program (PPP) was established as part of the CARES Act stimulus package. The basic concept was to allow small businesses to freeze in place their existing workforce in order to allow for two months of social distancing before reopening the economy.

The PPP is a loan program allowing businesses meeting certain criteria to have their loans forgiven. The criteria require employers to maintain the same number of full-time employees by June 30, 2020 as they had on average during the last year. In addition, those employed cannot be paid less than 75% of their previous salaries. Employers unable to meet these two criteria will not get their loans forgiven by a proportionate amount.

In addition, union employers must confirm with their lenders if the entire union compensation package would be eligible for forgiveness. There is still confusion about if fringe benefits other than health and retirement will be forgiven by the program.

The PPP allowed banks to begin issuing loans on April 3rd and has already disbursed the original $350 billion in funding. The construction industry led the way with the most loans of any industry. Over 70% of these loans were made for $150,000 or less.

The US Small Business Administration will resume accepting PPP loan applications on Monday, April 27 at 10:30 AM from approved lenders on behalf of any eligible borrower. Congress appropriated an additional $310 Billion for the program and added some new regulations to steer more funds to customers of community banks and credit unions. For PPP loans you apply though your bank and they submit to SBA on your behalf. If you did not already start the process with your bank, you need to act fast as there will be a major backlog.