CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (CARES) ACT BUSINESS LENDING & GRANT
PAYCHECK PROTECTION PROGRAM LOANS
The major lending provision to help small businesses in the CARES Act comes in the form of the new Paycheck Protection Program loans. These loans are being offered as an expansion under the existing SBA 7(a) loan programs, but luckily, on an expedited basis to businesses. Based on the size of the appropriation and its terms, this will be the most popular facility for businesses to access capital during the COVID-19 outbreak.
This program allows for a deferment of up to 1 year, but not less than 6 months, on any payments of interest and principal. There will be more regulations forthcoming on these provisions. It is due and expected within 30 days of the passage of the CARES Act.
One of the most popular provisions of this program is the loan forgiveness. In summary, the loan proceeds that are used within 8 weeks of the origination of the loan are eligible for forgiveness, subject to the following The loan proceeds are used for permitted purposes (except for non-mortgage debt interest). The loan recipient maintains a certain salary level for staff, subject to limits The loan recipient maintains a certain number of full-time equivalent employees. The forgiveness will NOT be considered taxable income.