The CARES Act permits the Paycheck Protection Program’s (PPP) forgivable loans for small business owners to pay for up to eight weeks of payroll costs, including benefits and other costs. In addition to payroll, recipients also can use PPP funds to pay interest on mortgages, rent, and utilities.
For an in-depth fact sheet about the PPP program, review the U.S. Treasury’s fact sheet.
An important fact to note from the Treasury document is that you cannot get more than one loan under the $349 billion Paycheck Protection Program. The federal government is taking steps to reduce fraud and suggests you should only submit one application to one lender.
Financial institutions will be required to notify law enforcement if they detect fraud, money laundering, terrorist financing, or other criminal acts and the misuse of financial institutions.
Regarding small business loans, a personal guarantee is a business owners legal promise to repay funds. Providing a personal guarantee means that if the business becomes unable to repay debt then the individual is personally responsible. The personal guarantee provides an extra level of protection to credit issuers, who want to make sure they will be repaid.
Although Paycheck Protection Program loans are not personally guaranteed*, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.
*For a traditional SBA 7(a) loan, a personal guarantee is required.
Many banks in the U.S. are only serving current customers at this time and the cap of available funds for these loans ($350 billion) is approaching. However, the Administration is asking banks to serve non-customers as well. Additionally, the spending cap is expected to be increased by $250 billion. As of April 10, the increased cap has not been approved.
In the meantime, make sure you are certified for a PPP loan. As part of your application, the Treasury Department states that you need to certify in good faith:
The documents required to apply include:
Following the PPP rules and having patience can help you get the funds you need to keep your business financially stable.