What are the benefits for your business or nonprofit?
On Friday, March 27, the Federal stimulus bill in response to the COVID-19 virus, known as the CARES Act, was signed into law. There are many key provisions in the legislation that benefit small businesses and nonprofit agencies, including the small business loan program known as the Paycheck Protection Program (PPP).
About the Paycheck Protection Program
Provides nearly $350 billion in low-interest loans for businesses with fewer than 500 employees — portions of which could be forgiven if the companies follow certain conditions, such as retaining their workers.
- Program details: Provides working capital assistance to small employers who maintain their payroll during this emergency. If the employer maintains its payroll, then the portion of the loan used for covered payroll costs would be forgiven.
- Unique loan features:
- No payments on your loan for the first 6-12 months
- No collateral or personal guarantees are required
- Repaid over a 10-year terms
- Fast funding
- Apply for potential loan forgiveness after receiving the funds
- Effective date: Retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls.
- Loan size: Equal to 250% (or 2.5 times) of an employer’s average monthly payroll and capped at $10 million.
- Interest rate: The interest rate for PPP loans is 4.00% fixed.
- Covered costs
- Salaries and wages (up to an annual rate of pay of $100,000 per employee).
- Mortgage Interest
- Rent
- Utilities
- Interest on debt obligations incurred before February 15, 2020
- Costs to participate: Exact costs are to be determined, but they have been further reduced for borrowers by providing fee waivers, an automatic deferment of payments for six months or up to one year and no prepayment penalties.
Please note: The implementation and application processes for many of the newly enacted CARES Act programs, including the PPP, are still being finalized by the Federal government. While we know the PPP will be administered through lenders, like Heartland Bank, that are certified by the Small Business Administration, the application process is NOT yet officially underway.
We are working diligently to understand the documentation requirements and application process thoroughly, so we can quickly help our clients apply for the loans. Please stay tuned for more detailed information and thank you for your patience as we learn more.
John is the Chairman and CEO of Heartland Bank. He is the third generation of the Wilkins family to lead the bank. John has 40 years of banking experience in various lending, wealth management, and branch leadership roles. In his free time, he enjoys traveling and spending time with his family.
