Payroll Protection Program - SBA 7(a) (Updated 6/18)
The Paycheck Protection Program provides 100% federally guaranteed loans to small businesses that maintain their payroll during this emergency. Businesses with 500 employees or fewer, including sole proprietors and independent contractors, may be eligible for SBA 7(a) loans in response to COVID-19 covering expenses for the period of Feb. 15, 2020 through December 31, 2020. The CARES Act appropriates $349 billion to cover these loans.
July 28: For brokerages that have applied for a Payroll Protection Program (PPP) loan or if you are considering applying, NAR has released a video with the new PPP guidelines.
July 22: There has been an extension of the PPP application deadline to Aug. 8, 2020. The program still has funding available as of July 22.
On June 17, SBA and the Treasury released updated forgiveness forms and guidance for PPP loans, based on the changes made by the "PPP Flexibility Act" signed into law on June 5. NAR's SBA FAQ has been updated to reflect these changes, which you can access here.
Notably, the updated forms clarify that the automatic forgiveness based on "owner-compensation replacement" is raised for borrowers who opt for the 24-week covered period from an 8-week amount (which still applies if borrowers choose the 8-week covered period) to an amount equal to 2.5x their average monthly net income. Thus, independent contractors who opt for the 24-week covered period are eligible to have their full PPP loan automatically forgiven under the new guidelines. These borrowers must still complete and submit a forgiveness application to their lenders.
In addition to updating the earlier forgiveness application form to reflect the lower 60% requirement for payroll expenses (down from 75%) and the extended 24-week covered period (borrowers who received their loans before June 5 can opt for either an 8- or 24-week period; borrowers who received them after must use 24-weeks), it also created a streamlined "EZ Forgiveness Application."
The EZ Forgiveness Application is for borrowers that:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%.
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