A top line overview of the CARES Act’s Paycheck Protection Program (the PPP), released Tuesday by the BSA, summarizes the PPP. According to this overview, the PPP “provides small businesses with funds to pay up to eight weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.” An extensive summary of the PPP can be found here.

At the same time it released the program overview, the SBA issued an application form for PPP loans, a lender information sheet and a borrower information sheet.

Key takeaways from the new guidance include the following:

  • Due to the expectation of high subscription, it is anticipated that at least 75 percent of forgiven amounts must have been used for payroll.
  • In underwriting the loans, lenders are expected to: (1) verify that the applicant was in business and paying salary and payroll taxes as of February 15, 2020; (2) verify the dollar amount of average monthly payroll costs; and (3) follow applicable Bank Secrecy Act requirements.
  • Fees for agent services, payable by the lender, are apparently set or capped at 1 percent for loans of $350,000 or less; 0.50 percent for loans greater than $350,000 up to $2 million; and 0.25 percent for loans greater than $2 million.
  • Borrowers will need to submit payroll documentation with their applications. Apparently, this documentation will be in the form of payroll tax filings and/or 1099s.

We will provide updates as further guidance and information become available. In the meantime, Ballard Spahr attorneys are assisting lenders and borrowers in making and obtaining PPP loans and are advising lenders and borrowers in navigating the PPP loan application and origination process.


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