What’s New in the Paycheck Protection Program This Week

Starting Friday, April 3, small businesses and sole proprietors can claim the $ 349 billion Paycheque Protection Program (PPP). It is not clear which lenders are involved, and some banks indicate confusion about the program, and there is a good reason for this: the program keeps changing.

On Thursday evening, the Small Business Administration released a 31 page document describing the latest program updates, although details are still subject to change. Ami Kassar, Founder and CEO of MultiFunding, and Inc. A columnist who advises business owners on access to capital, hosted a webinar open to small business owners on April 3 to review these new additions and clarifications.

Here’s what’s new for this week:

1. Increase the interest rate.

The interest rate on PPP loans is now 1%. Originally, the interest rate was set at 4% with a repayment term of 10 years. Then it was lowered to half a percent with a two-year repayment term. The most recent provisions raise the interest rate to 1%, with a two-year repayment term. Although you don’t need to make any payments for six months after the loan disbursement date, interest will continue to accrue.
during the period.

2. Fixes the conditions of domicile and citizenship

If one or more of your business owners are not U.S. citizens or domiciled in the United States, the business still qualifies. This means that employees who work in the United States can return to work, regardless of where their boss lives or whether they are a United States citizen.

3. Clarifies ownership status.

The new directive clarifies who the program considers a business owner. For partnerships, limited liability companies and corporations, any person holding at least 20% of the capital of a business is considered an owner. For companies in which a trust owns at least 20 percent of a business, the trustee is considered an owner.

4. Describes the disqualification standards.

You cannot get a PPP loan if you or a landlord is currently suspended, written off, or offered for delisting. You will also be disqualified if you are declared ineligible or voluntarily excluded from participation in the transaction by a federal department or agency or if you are currently involved in bankruptcy.

You are also disqualified if you or any other homeowner has obtained a direct or guaranteed loan from the SBA or any other federal agency that is currently in default or has defaulted within the past seven years and has caused a loss to the government.

5. Codifies payroll calculations for new and seasonal businesses.

Most business owners can submit their average monthly payroll for 2019 when they apply for a loan (excluding payroll costs over $ 100,000 on an annualized basis for each employee). But for seasonal businesses and new businesses, it gets a little trickier.

Seasonal businesses can now submit the average monthly payroll for the period February 15, 2019 through June 30, 2019. New businesses can choose to use the average monthly payroll between January 1, 2020 and February 29, 2020. For seasonal businesses and new businesses. you always exclude costs over $ 100,000 on an annualized basis for each employee.

6. Force banks to alert authorities.

Financial institutions will be required to notify the police if they detect fraud, money laundering, terrorist financing or other criminal acts and the misuse of financial institutions.

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