The Department of Treasury has made amendments to the Paycheck Protection Program created under the CARES Act. Here’s what you need to know:
As of midnight April 3, 2020 small business owners were eligible to apply for the Paycheck Protection Program (PPP) that I discussed in my last post. Starting April 10, 2020 independent contractors and sole proprietors can begin submitting applications for the PPP.
The list of approved lenders has been expanded to include:
- Small business administration (SBA) lenders
- Any federally insured depository institution
- Participating federally insured credit unions
- Participating Farm Credit System institutions
- Other regulated lenders who apply for approval
The original CARES Act indicated that loan interest rates can not be more than 4%. A fixed interest rate of .5% was later established for the program. On April 2, 2020 the fixed interest rate was increased to 1% after smaller lending institutions had further discussions with the federal government. While there has been a slight increase in the fixed interest rate, it is still much lower than initially proposed upper limits of 4%. Thus, this is still a great program for small businesses who are suffering economic hardships during the COVID-19 pandemic.
We will keep you updated as more changes are implemented within the Paycheck Protection Program.