SBA Loans Video 9--Paycheck Protection Program Update

Attorney Thomas B. Burton discusses the latest updates and information regarding the Paycheck Protection Program in Video 9 of his series on these new SBA Loans under the CARES Act.


Link to SBA Interim Final Rule


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Transcript of Video: SBA Loans Video 9—Paycheck Protection Program Update

On the Paycheck protection program so

there's been a lot of news this week

about the Paycheck protection program

and if you've been following along you

know the program ran out of money last

week I believe on Thursday the initial

349 billion dollars was gone

currently there's a bill moving through

Congress to allocate more funds and

people it has passed the Senate they're

speculating it could pass the House as

soon as tomorrow but if you go to the

SBA website right now it's going to say

we're out of funds due to a funding

lapse but in the meantime I know some

people got their application in and I'm

hearing the funds that are coming may go

fast so if you're still thinking about

applying I would still get your

application in to your lender as soon as

you can and watch my previous eight

videos about some of the requirements

and things you want to watch to watch

for as you're applying but today I

wanted to talk briefly a little bit more

about these SBA interim final rules and

for those who have started to receive

your loan proceeds a reminder to look at

the allowable use of the funds going

forward so that you can qualify for that

maximum loan forgiveness under the

program and again remember you can use

the funds for payroll costs rent and

certain covered utilities for the eight

week period starting on the date you

receive your loan proceeds but one

thing to note about the payroll cost

I've gone over this before but you cannot

use it for any employee whose principal

place of residence is overseas so you

have to use it to pay us US-based employees

keep that in mind if you're a company

with people working remotely from

different locations and a reminder the

interest rate is 1% now I want to jump

ahead because some of my people I'm

talking to are starting to receive their

loans so you want to focus on some of

the

requirements of these loans and in this

interim rule from the SBA I'm putting a

link in this video

it's on the SBA website it came out April

15th and the comment period is open

until May 15th so if you have comments to

submit get them in in that comment

period but the question is when will I

have to begin paying principal and

interest on my PPP loan their answer is

you will not have to make any payments

on the six months following the date of

disbursement of the loan okay so if you

apply for the loan the date the money

actually gets dispersed to you in your

account that's going to be the date of

disbursement six months from that date a

payment is due however interest will accrue

on the PPP loan during that six

month period so you get the money it goes in

your bank account six months later the

first payment is due interest starts

accruing on day one and again that's 1%

it allows the Act allows the SBA to

defer loan payment for up to one year

but they determined six months deferment

was appropriate so but what you want to

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do is use the loan funds for the covered

reasons listed in the Act and then apply for

that loan forgiveness but the SBA goes a

little bit more into here how they came

up with that seventy five percent number

you'll recall I talked about how they

said they want 75% of the funds to be

used on payroll costs not on rent and