Stimulus Cash - Free Money to Keep Employees on the Payroll

Congress is spending $350 billion to help small businesses through the Paycheck Protection Program known as PPP.  This stimulus package is part of the $2 Trillion stimulus packaged named CARES Act.

Small businesses will receive loans up to $10 Million as long as they have fewer than 500 employees.  The interest rate is at 1% and the loan term is two years.  What is unique about these loans is that they are “forgivable” which means that the owners get to keep the money if they use it to keep paying employees who earn less than $100,000 a year, or for monthly rent (or mortgage) and utilities.  However, 75% of the loan proceeds must be used to pay for payroll. Also, the first loan payment will be deferred for six months. If the owner elects to use the money for anything else, then they must repay the money within two years at a 1% interest rate with a government guarantee protecting the bank or credit union from the loss.