The CARES Act: Paycheck Protection Program Update
Nearly $350 billion was designated to the Paycheck Protection Program (PPP), which provides forgivable loans through the Small Business Administration SBA) covering the period of Feb. 15, 2020 through June 30, 2020. Currently, the SBA expects that the PPP will be up and running by Friday, April 3, 2020. Businesses can meet with participating SBA 7(a) lenders, banks or credit unions to apply and the goal is for the PPP loans to be approved on the same day the application is submitted.
All PPP loans will (i) be 100% guaranteed by the SBA; (ii) not require a pledge of any collateral; (iii) not require any personal guarantees and (iv) not contain any borrower or lender fees due to the SBA.
Additionally, there have been questions on eligibility based on the size of the business. Generally, the program covers businesses with less than 500 employees unless such industry’s SBA size standard allows for more than 500 employees (review the size standards here). Further, the SBA generally requires aggregation of all employees across all affiliated entities. There is, however, an exception to the 500 employee threshold for businesses that are assigned a North American Industry Classification (NAICS) code which starts with “72” (i.e. Accommodation and Food Service Businesses) in that the 500 employee limitation will be viewed on a per physical location basis rather than across all affiliated entities.
If you have questions about the PPP loans or other economic relief measures, please contact Patrick Wartan or a member of Taft's Food and Beverage group.
Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.
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