At Kin, we work alongside hundreds of small businesses every day. The COVID-19 crisis has hit us all in different ways, making at least one thing clear: many small businesses are facing challenges we would never have thought of just a few months ago.
One important program to look into for U.S. companies worried about being able to pay or retain employees is the federal government’s new Paycheck Protection Program (PPP).
As part of the massive U.S. stimulus bill, small businesses that are facing disruption due to the crisis can start applying for these forgivable loans as of April 3, 2020.
Who is eligible?
Any small business in the United States who has less than 500 employees and has been in operation since February 15, 2020 is eligible.
What can I use this loan for?
It can be used for payroll costs, interest on mortgages, rent and utilities. In order to qualify for forgiveness, at least 75% of the forgiven amount must be used for payroll. Forgiveness is based on an employer maintaining or quickly rehiring employees and keeping their salaries as is. Forgiveness will be reduced if your full-time employee headcount declines, or if salaries or wages are cut.
What is the interest rate?
The interest rate is 1% and the repayment term is two years. You will not owe your first payment for at least six months. No collateral or personal guarantees are required, but they may be asked for during the application process.
How do I apply?
You can apply through any existing SBA 7(a) lender or through any federally-insured institution, credit union, etc. Please note that not all banks are offering this, so it’s best to call ahead before you venture out.
What if I’m self employed or an independent contractor?
You are still eligible. However, loan processing for this group begins April 10. Employers who have only 1099 team members do not qualify for this loan. 1099 team members must apply on their own. If you have a mix of W2 and 1099 team members, you will only qualify for W2 team members.
If you or your company has started the application process, we’d appreciate hearing about your experience (processing times, which banks, etc.) with the hopes of sharing it with any other customers who may need assistance. If you’re willing to share your experience, please write us at TheTeam@KinHR.com.