Editor’s Note: Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly. Please refer to the latest guidance from SBA and Treasury to confirm current program rules. The information contained in this article only applies to certain small businesses and other eligible organizations. For example, effective April 20, 2020, if you filed or will file a 2019 IRS Form 1040 Schedule C, other rules apply.
The Paycheck Protection Program (PPP) is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. PPP loans are intended to help small businesses continue paying payroll costs and certain operating expenses during the coronavirus pandemic.
Business owners can apply for a loan of 2.5 times their average monthly payroll expenses to be used for eligible payroll costs , rent, mortgage interest, utilities, operations expenditures, property damage costs, supplier costs, worker protection expenditures, interest on certain other debt obligations, and refinancing an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020.
At least 60% of the loan proceeds must be used for eligible payroll costs, and no more than 40% of loan proceeds may be used for eligible non payroll costs. Loans through the Paycheck Protection Program may be forgivable, in whole or in part, if certain criteria are met.