Covid-19 Update: Additional Funding Now Available for SBA Paycheck Protection Program (“PPP”) Loans

Last week, the Small Business Administration (“SBA”) ran out of funding for Paycheck Protection Program (“PPP”) loans.

On April 23, 2020, the House passed the Paycheck Protection Program and Health Care Enhancement Act, which the President subsequently signed into law today. The Act increases the funding available for the PPP loans by $310 billion.

If you were not able to receive funding under the first round of PPP loans, we encourage you to reach out to your banker to find out the details of the application process for the PPP. We would advise you to do so immediately as we believe there will be a rush to take advantage of the additional loan funding.

Through the SBA, lenders will have the ability to make PPP loans to businesses with fewer than 500 employees. The amount of the PPP loan is based upon the lesser of (i) two and half times your payroll costs, including wages and certain benefits, for 2019 (payroll costs are capped at $100,000 per employee) or (ii) $10 million. The application process for the PPP loan is extremely streamlined, with limited documents and financial data required to be submitted to banks in order to qualify for the PPP loans. The PPP loans will not be collateralized and are non-recourse, with no personal guarantees required.

For the period beginning from the date of loan and ending eight weeks later, employers will be required to utilize the proceeds from the loan for: (i) payroll costs; (ii) interest on certain mortgage obligations; (iii) rent; and (iv) utilities. The amount of funds expended for these purposes will be forgiven by the SBA based upon guidelines provided by the SBA. Any debt forgiveness will be tax-free. For any remaining balances of the PPP loan, your banker will be able to provide two-year amortization schedule and the interest rate shall be 1% per annum (penalty free prepayment is also an option). The most important requirement to qualify for any debt forgiveness is that the employer must maintain all full time and part time employees during the 8-week period.

More information can be found at the U.S. Department of Treasury website and the SBA Covid-19 loan resource page.

Please let us know if you have any questions or need additional guidance regarding the Payroll Protection Program. After you have discussed the availability of a PPP loan with your banker and accountant, we would be happy to assist your business as you seek to deploy this unprecedented program to help your business move forward during the COVID-19 crisis.

Ann R. Starcher  

Member    

Lewis Glasser PLLC   

(O) 304.345.2000 (Ext. 1010) / (D) 304.414.9010                       

lewisglasser.com / astarcher@lewisglasser.com                      

300 Summers Street, Suite 700

Charleston, West Virginia 25301

 

Matthew R. Bowles  

Member    

Lewis Glasser PLLC   

(O) 304.345.2000 (Ext. 1039) / (D) 304.414.9001                       

lewisglasser.com / mbowles@lewisglasser.com                      

300 Summers Street, Suite 700

Charleston, West Virginia 25301

 

James M. Becker  

Associate    

Lewis Glasser PLLC   

(O) 304.345.2000 (Ext. 1014) / (D) 304.414.9014                       

lewisglasser.com  / jbecker@lewisglasser.com                       

300 Summers Street, Suite 700

Charleston, West Virginia 25301

 

Lewis Glasser PLLC

304-345-2000 / lewisglasser.com/covid-19-resources

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This e-update is advertising material intended to provide addressees with informational updates and perspectives regarding matters of interest in connection with the COVID 19 pandemic. This e-update does not constitute legal advice, the provision of legal counseling or any other professional service, nor does it constitute a legal opinion regarding any specific facts. No attorney-client relationship is created by this e-update and this e-update does not constitute an offer to provide legal services.

The nature of the current crisis has resulted in an extraordinary pace of new developments. Readers are encouraged to follow up regularly on new developments in areas of interest and to consult with legal counsel at Lewis Glasser PLLC for guidance and to resolve specific matters or questions.

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Lewis Glasser PLLC, 300 Summers Street, Suite 700, Charleston, West Virginia 25301

304-345-2000