As a part of the federal CARES Act, the Paycheck Protection Program provides small businesses with funds to pay up to eight weeks of payroll costs including benefits. Starting on Friday, April 3, small businesses and sole proprietorships can apply. The U.S. Department of Treasury has recently released some new information regarding the program, including this fact sheet for borrowers and the application form.

The Paycheck Protection Program has been approved for $350 billion in loans to small businesses. Eligibility for the program is based on employment levels. Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.

These funds can be used to pay interest on mortgages, rent and utilities. Additionally, they are provided in the form of loans that will be fully forgiven when used for payroll costs, interest on mortgages, rent and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months and no collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Forgiveness of this loan is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time employee headcounts decline, or if salaries and wages decrease.

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.