As discussed in our recent article, the Coronavirus Aid, Relief and Economic Security (“CARES”) Act will allocate up to $350 billion to the federal Small Business Administration (“SBA”) to provide Paycheck Protection Program (“PPP”) loans of up to $10 million to cover payroll, rent, mortgage interest and utility expenses incurred for an 8-week period between February 15, 2020 and June 30, 2020.
The United States Department of Treasury has issued additional guidance advising that small businesses and sole proprietorships may begin applying for PPP loans as early as Friday, April 3, 2020. Independent contractors and self-employed individuals may apply beginning April 10, 2020.
Additionally, the SBA has now published a sample loan application for PPP loans. The application requests, among other items: (1) information about any individual who has a 20% or greater ownership interest in the business submitting the application; (2) whether there is common ownership with any other business; (3) the average monthly payroll amounts for the business; (4) the number of jobs that are part of payroll; and (5) the purpose of the loan (i.e., payroll, rent, mortgage interest, utilities). The business must also answer questions, and make a number of certifications to the SBA, with respect to, among other items, prior bankruptcies, certain loans (including SBA Economic Injury Disaster Loans), exclusions and terminations from federal programs, and any criminal indictments and convictions.
As mentioned in our previous publication regarding the PPP, loans will be made by current SBA lenders. A list of those lenders can be found on the SBA’s website here. Other recent guidance by the Department of Treasury expands the eligible lenders to: “[all] federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions,” and additionally allows new lenders to apply to the SBA for authority to begin making PPP loans.
If you have any questions about the CARES Act and related SBA loans in light of the COVID-19 pandemic, please feel free to reach out to the Firm. We will be keeping abreast of new information as it becomes available.
Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors’ rights, and commercial real estate transactions.
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