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April 2020

Paycheck Protection Program to Begin April 3rd

Last updated April 3, 2020

On March 31, 2020, the U.S. Department of the Treasury (the “Treasury Department”) issued guidance (the “Guidance”) on the Paycheck Protection Program, a Small Business Administration (the “SBA”) loan program created by the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) that will provide forgivable loans to small businesses impacted by the COVID-19 pandemic. Click here to view our prior alert summarizing the Paycheck Protection Program. The Guidance contains useful information for businesses and lenders seeking to take advantage of this new program.

The Guidance provides important insight into the application process for businesses seeking loans under the Paycheck Protection Program. Small businesses and sole proprietors may apply for loans from existing SBA-authorized lenders beginning on April 3, 2020, and independent contractors and self-employed individuals can begin the application process on April 10, 2020. To apply for a loan, the borrower must complete an application (the SBA application can be found here), and submit certain payroll documentation to substantiate the amount of the loan sought.

The Guidance also includes details regarding the terms of the loans that were not expressly outlined in the CARES Act. Specifically, loans extended under the Paycheck Protection Program will bear an interest rate of .5% and, to the extent they are not forgiven, will have a term of two years. All payments under the loan are deferred for six months, but interest will accrue during the deferral period.

Under the CARES Act, loans extended under the Paycheck Protection Program are eligible for forgiveness, without federal income tax consequences, in an amount equal to the amount the borrower expends in the eight-week period following origination of the loan for payroll costs (as defined in the CARES Act), and certain mortgage interest, rent, and utility payments. The Treasury Department anticipates, however, that due to likely high subscription, not more than 25% of the forgiven amount may be for costs other than payroll costs.

To get a head start on the application process, CSG recommends that you gather the information and documentation necessary to establish the amount you qualify for now. As a service to our clients, please find below a suggested list of items to gather: 

- 2019 IRS Quarterly 940, 941 or 944 payroll tax reports

- Last 12 months of Payroll Reports beginning with your last payroll date and going backwards 12 months (and for 2019)

- Payroll report must show the following for the time period above:

1. Gross wages for each employee, including the officer(s) if paid W-2 wages.

2. Paid time off for each employee

3. Vacation pay for each employee

4. Family medical leave pay for each employee

5. State and Local taxes assessed on the employee's compensation for each employee.

- Documentation showing total of all health insurance premiums paid by the Company Owner under a group health plan.

- Include all employees and the company owners

- Document the sum of all retirement plan funding that was paid by the Company Owner (do not include funding that came from the employee's out of their paycheck deferrals).

The Guidance for borrowers can be found here. The Treasury Department also released Guidance for lenders, which can be found here.

CSG will continue to track any guidance and regulations that may be issued by the Treasury Department in connection with the Paycheck Protection Program and provide updates. If you have any questions regarding the Paycheck Protection Program or other federal and state economic assistance programs, please reach out to your CSG attorney.

For additional information pertaining to the coronavirus outbreak, please visit CSG's COVID-19 Resource Center.


This publication contains general information on recent legal developments and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Attorney Advertising. Prior results do not guarantee a similar outcome.

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Visit CSG's COVID-19 Resource Center.