This article was originally published on April 9, 2020. Last updated on April 22, 2020.
April 22, 2020 Update: Less than a week after the Paycheck Protection Program ran out of funds, Congress has approved an additional $320 billion that could be available as early as next week. The Senate passed the bill on Tuesday and the House is expected to vote on the bill on Thursday. This is great news for small businesses that applied and didn't receive funds and for independent contractors and self-employed individuals who weren't even allowed to apply for the loans until April 10.
The new funding also allocates $60 billion to the Economic Injury Disaster Loan program which is intended to be used for working capital.
April 17, 2020 Update: The Paycheck Protection Program, which was part of the CARES Act, has run out of the $349 billion available for small businesses to be able to keep their workers employed for eight weeks during the pandemic. Companies that qualified were able to start applying on April 3, 2020 and it was expected to run through June 30, 2020. The Small Business Administration said that they are no longer accepting applications while the Treasury Department and Congress work to approve more funding.
The CARES (Coronavirus Aid, Relief, and Economic Security) Act includes many potential relief opportunities for the nation’s construction industry, which has been hit hard with disrupted supply demand, delayed projects, closed sites, and labor shortages. The Paycheck Protection Program (PPP), a provision in the CARES Act, will help construction companies keep their workforce employed during the coronavirus crisis.
Contractors and construction firms need to apply as soon as possible to benefit from the PPP. Funds will be granted on a first-come-first-serve basis and the Small Business Administration (SBA) expects to quickly distribute the $349 billion available for the program.
Here are the things your construction company needs to know about the SBA’s Payment Protective Program to immediately take advantage of the program and help your business.
The maximum loan amount will be 2.5 times your average monthly payroll expenses from 2019, up to $10 million. Payroll costs are capped at $100,000 annualized for each employee.
Small businesses and sole proprietorships were allowed to start applying on April 3, 2020. On April 10, 2020, independent contractors and self-employed individuals may begin applying.
You can apply through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, or Farm Credit System institution. Visit sba.gov to find participating financial institutions. Grants are available now through June 30, 2020 or until the funds are depleted.
If all employees are kept on the payroll for 8 weeks, the grant becomes forgiven at the end of the 8-week loan period. If you don’t meet requirements, the amount of your loan forgiven will be reduced. Any amount of the loan not forgiven will continue as a 2-year loan with a fixed interest rate of 1.0% and is 100% guaranteed by the SBA.
Demand for the loans are expected to be high so for the full amount to be forgiven 75% of the loan will have to be used for payroll costs.
You can still participate in the PPP even if you have another loan from the SBA or additional debt.
For more information, visit sba.gov