One aspect of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, signed by President Trump on March 27, 2020, is the Paycheck Protection Program. The objective of the Program is keeping American workers paid and employed during the crisis. The Act permits the Small Business Administration (SBA) to extend loans to employers who meet certain criteria, and maintain their payroll for up to 2 months during the crisis.
The criteria for the Program is as follows:
- Fewer than 500 employees
- Continue to pay your employees – no lay-offs
- Have no outstanding SBA loan already
The most important aspect of the Program is that these loans will be forgiven provided that the employer continues to pay its employees, with no lay-offs. Another appealing aspect is that there are no application fees and no personal guarantees required.
The size of the loan is based on average monthly payroll. Additionally, mortgage, rent, utility payments and other debts are considered. The loan amount equals the sum of the average monthly payroll costs, times 2.5. It excludes individuals making over $100,000, for the preceding 12 month period, and is capped at $10 million.
If you have any questions about the CARES Act or any other employment-related questions, please reach out to the Employment and Labor Practice Group at Laddey, Clark & Ryan, LLP:
- Thomas N. Ryan, Esq. (tryan@lcrlaw.com)
- Ursula H. Leo, Esq. (uleo@lcrlaw.com)
- Nicole C. Tracy, Esq. (ntracy@lcrlaw.com)
Our attorneys can also be reached at: 973-729-1880
