Paycheck Protection Program Loans that are distributed through SBA lenders. The program provides cash-flow assistance through 100% guaranteed loans to business and 501(c)3 employers who maintain their payroll during the covid-19 crisis. Businesses, non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees.
- Low interest rate – 0.5% to 1%
- Short loan terms – 2-year maturity
- Zero closing fees
- No personal guarantees and no collateral
- No loan payments for 6 months
- Loan amounts up to $10 million
- The SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The program will be available retroactive from February 15, 2020, so employers can rehire their recently laid-off employees through December 31, 2020.
Apply through a local SBA lenders. First round of PPP loans closed on August 8, 2020.
Second Draw PPP Loans
Here’s how to determine if you qualify for a second PPP Loan:
- You can show a loss of at least 25% of revenue in any one quarter last year.
- You have used up your first PPP Loan Draw for authorized uses.
- You have fewer than 300 employees.
There are updated rules about what qualifies as a covered expense that can then be forgiven. In this round, 60% must be spend on payroll and 40% can be spent on:
• Rent or interest on mortgage payments
• Business software
• Costs related to property damage during the upraising of 2020.
• Supplier costs that are deemed essential to the operation of the business
• Costs for PPE or other safety measures
PPP Flexibility Act
On June 5, the president signed the PPP Flexibility Act, which gives borrowers more freedom in how and when loan funds are spent while retaining the possibility of full forgiveness.
Key changes to the original Paycheck Protection Program:
- Borrowers now have 24 weeks to spend loan proceeds, up from 8 weeks.
- The Act also reduces mandatory payroll spending from 75% to 60%.
- Two new exceptions let borrowers obtain full forgiveness even without fully restoring their workforce.
- Time to pay off the loan has been extended to five years from the original two.
- The Act now lets businesses delay paying payroll taxes even if they took a PPP loan.
PPP loan forgiveness
PPP Loan Forgiveness Application for any business that does not qualify to use the other forgiveness applications.
PPP Loan Forgiveness Application Form 3508EZ for sole proprietors and any employer who has not reduced wages more than 25% during the covered period.
PPP Loan Forgiveness Application Form 3508S for any business that borrowed less than $50,000.
PPP Loan Simplified Forgiveness Application for any business who has borrowed less than $150,000. (NEW)
Massachusetts Equitable PPP Access Initiative – Organizations that do not have a banking relationship with an SBA Lender can apply through this initiative. Berkshire Bank, BayCoast Bank, Eastern Bank, Reading Coop Bank, Leader Bank and several CDFIs will be processing PPP applications for non-customer businesses that meet the following criteria:
- You are a minority-owned business, sole proprietor or independent contractor operating in Massachusetts
- You have not previously applied for the PPP, or you applied and received notification from your bank that you were not approved in the first PPP round.
- You do not have a banking relationship with an SBA PPP lender.
The SBA Economic Injury Disaster Loan (EIDL) Program – Small businesses, private non-profit organizations of any size and cooperatives can apply for this loan. These funds can be used as working capital to help organizations make payments—payroll, rent, debt service payments—that they would have made had the crisis not occurred.
- Low interest – 3.75% interest rate for for-profit businesses and 2.75% rate for nonprofits
- Long loan terms – up to 30 years
- 12 month payment deferral (although interest accrues)
- Expedited loans for under $500k & don’t have to upload tax returns (private nonprofits must submit tax returns)
- Approximately one month processing time
- Up to $2 million
The SBA also announced Express Bridge Loans that provide up to $25,000 in emergency financing for disaster-related purposes. A business must have an existing relationship with the lender, either from a current loan or if the business is awaiting longer-term financing from the EIDL program.
The SBA has established a toll-free line to answer questions at 1-800-659-2955 Monday to Saturday 8am to 8pm.
#COVID Capital Relief created by the CASE Center at Duke University is a searchable national database of grants, loans and other cash equivalents for entrepreneurs, nonprofits, and businesses.
The IRS has extended the federal tax filing deadline to July 15, 2020. The MA State tax filing deadline has also been extended to July 15, 2020.
Most utility companies are waiving late fees and will not terminate service for inability to pay their bills on time. Check with your individual providers for more information.
Most banks and credit card companies are waiving late fees are deferring payments. Call your financial institutions for more information.