Common use of Paycheck Protection Program Clause in Contracts

Paycheck Protection Program. Provides for up to $10 million in small business loans as part of the SBA’s 7(a) loan guaranty program during the covered period of February 15, 2020 through June 30, 2020. Accomplished through new paycheck protection loans administered through the Paycheck Protection Program. • Authorizes $349,000,000,000 in loan commitments for general business loans under the 7(a) loan guarantee program. • Program generally defines eligible businesses as those with no more than 500 employees. Sole proprietors, independent contractors, and certain self-employed individuals are also included. Businesses with more than one physical location, but fewer than 500 employees at each site, in the accommodation and food services industries (i.e., classified as “Accommodation and Food Services” by NAICS), as well as tribal businesses described in section 31(b)(2)(C) of the Small Business Act with no more than 500 employees, also qualify. • Unlike other SBA programs that are limited to for-profit businesses, the measure defines eligible businesses to include nonprofit organizations, which is limited to section 501(c)(3) organizations. “Veteran organizations,” as defined in section 501(c)(19) of the Internal Revenue Code, are separately referenced outside the definition of “nonprofit organization,” but are also considered eligible. The measure extends the SBA affiliation rules to nonprofits for purposes of determining whether an entity is small enough. • The measure defines “employee” for purposes of determining whether a business employs fewer than 500 employees to include full-time, part-time, and other-basis employees. • The maximum loan amount under the 7(a) loan guaranty program has been increased to $10 million, and loaned funds may now be used for “payroll costs”; costs related to the continuation of group health care benefits, like paid sick, family, or medical leave; insurance premiums; salaries wages; commissions, cash, etc., compensation to sole proprietors or independent contractors (including commission-based compensation) up to $100,000 in 1 year, prorated for the covered period; interest on any mortgage obligation; rent; utilities; and the interest on other debt obligations. “Payroll costs” does not include individual employee compensation in excess of a salary of $100,000 per year, prorated for the covered period, compensation for an employee whose principal place of residence is outside the United States, certain taxes, and qualified sick and family leave subject to certain credits. Measure provides a formula for determining the size of the loan. • Borrowers are required to certify that the uncertainty of current economic conditions makes the loan request necessary and acknowledge that funds will be used to retain workers and maintain payroll, and that the recipient does not have an application pending and has not received funding under this section for the same purpose and duplicative amounts. The eligibility criteria require lenders to determine whether the borrower was operational on February 15, 2020 and had employees (or independent contractors) to whom it paid salaries and for whom it paid payroll taxes. • Waives the collateral and personal guarantee requirements under the program. Caps the interest rate at 4 percent. • Provides a limitation on borrowers from receiving assistance and economic injury disaster loans through the SBA for the same purpose. EIDL loans made between January 31, 2020 and the date paycheck protection loans are available may be refinanced as part of a paycheck protection loan. • Fees are waived for both borrowers and lenders. Waives any prepayment penalty. • The bill provides for complete deferment of applicable loan payments for a period not less than 6 months and up to one year. The SBA has been required to issue guidance to lenders on the payment deferment process within 30 days. • Includes a “sense of the Senate” for the SBA Administrator to issue guidance to lenders and agents to prioritize certain borrowers, including small businesses in underserved and rural markets, veterans, start-ups, and small businesses owned by women and social and economically disadvantaged individuals. • Provides for up to $1 million in small business loans through the SBA Express Loan program through December 31, 2020.