The Small Business Legislative Council: Important Update on Paycheck Protection Program
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On March 31, the SBA issued guidelines (SBA Guidelines) to implement the Paycheck Protection Program (PPP) which was a critical part of the recently passed CARES Act. While the CARES Act provides for a maximum maturity of 10 years, and an interest rate not to exceed 4% per annum, the SBA Guidelines originally provided that all PPP Loans will have a 2-year maturity, and a rate per annum of 0.5%. On April 2, the SBA issued further clarification through its Interim Final Rule providing that all PPP Loans will carry a rate per annum of 1.0%; the Interim Final Rule does not change the 2-year maturity. It is still not clear from the guidance what date maturity will be measured from (date of loan v. date of forgiveness as provided in the Act). Needless to say, the parameters of the PPP are fluid and further guidance is expected.