Business Loans Through the Paycheck Protection Program

The recently passed CARES Act creates a specific loan program through the Small Business Administration to help small businesses retain employees and pay critical expenses in this challenging time. Under the Paycheck Protection Program (PPP), the SBA's current 7(a) loan guaranty program is expanded and modified to provide up to $349 billion of federally guaranteed loans for small businesses. Loans will be made through local lenders and some or all may qualify to be converted to “grants.”

NOTE: Some of this information may change as regulations are finalized and implemented. We will update as new details become available.

Borrowers and lenders: CLICK HERE for Treasury-issued guidance about the PPP program.

How does the PPP differ from the SBA disaster loan we previously wrote about?

• No personal or business collateral is required. The SBA disaster loan may require collateral for loan amounts over $25,000.
• It’s ok if you also have access to credit elsewhere. To receive a SBA disaster loan you generally need to have no other source of credit.
• PPP funding covers a more restrictive set of purposes. The SBA disaster loan can cover most operating expenses.
• Your loan can be forgiven if you follow the terms. The SBA disaster loan requires repayment.

How is the PPP similar to the SBA disaster loan?

• You need to demonstrate your business was economically affected by COVID-19.
• It’s free to apply.
• You have an extended deferment period (6 months) before you begin repayment.
• There is no prepayment penalty.

CONTACT:

Scott Dawson, CPA
Director, Client Accounting Services
sdawson@klcpas.com | 574.289.4011 x255