Late on March 31, 2020, the U.S. Treasury made available the Paycheck Protection Program Application Form as well as information for borrowers and lenders.  The Application is two pages plus two pages of instructions.  The announcement provided some clarification of the law which passed on March 27, 2020. 

Key Areas of Clarification:

When can I apply?

• Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

What other documents will I need to include in my application?

You will need to provide your lender with payroll documentation.

How is the $100,000 cap applied?

Payroll costs are capped at $100,000 on an annualized basis for each employee.

New Information about Loan Forgiveness:

• You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan.
• Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
• You will also owe money if you do not maintain your staff and payroll.
• Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
• Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
• Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. Payroll costs are capped at $100,000 on an annualized basis for each employee.

The Application and information for borrowers and lenders can be found the link below: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses

Prepared By: 
Stuart J. Vogelsmeier
Phone 314-436-8349
Email: sjvogels@lashlybaer.com

Michael D. Regan
Phone: 314-436-8339
Email: mregan@lashlybaer.com

This summary and legal alert is an overview of the new guidance. It is not intended to be, and should not be construed as, legal advice for a specific factual situation.