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CARES Act Update: Paycheck Protection Program Loan

CARES Act Update: Paycheck Protection Program Loan

UPDATE: On April 2 the Treasury Department issued an interim final rule to the Paycheck Protection Program. It includes further guidance and changes the interest rate to 1% instead of 0.5% as previously announced. Certain key components await clarification

Beginning this Friday, April 3, small businesses and sole proprietorships affected by COVID-19 can apply for loans under the federal Paycheck Protection Program (PPP), part of the CARES Act (Coronavirus Aid, Relief and Economic Security Act). Independent contractors and self-employed individuals can apply beginning April 10.

The Program authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be identical for everyone.

Of note, changes since our last update include:

  • The interest rate is 0.5%.
  • The loan term is 2 years.
  • Loan payments will be deferred for 6 months.
  • Loan forgiveness is reduced if more than 25% of the loan is used for purposes other than payroll.

The U.S. Department of the Treasury has urged those in need to apply quickly, since the program is capped and demand is expected to be high.

Our attorneys are available to assist you with compiling the necessary data, reviewing documents, and applying for the Program. Application does not involve any attorney fees for borrowers.

For any assistance or questions, contact us.

We expect additional details soon, and we’ll update our COVID-19 Legal Assistance Practice page with the latest information. To stay updated, sign up for our mailing lists.

Morris Sabbagh is a partner in Vishnick McGovern Milizio’s Tax, Trusts & Estates, Elder Law, and COVID-19 Legal Assistance Practices. He can be reached at msabbagh@vmmlegal.com and 516.437.4385 x120