What is the Paycheck Protection Program?
The PPP is a loan program that originated as part of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) designed to provide federal assistance for small businesses and other qualifying entities impacted by COVID-19 as a direct incentive to keep their employees on payroll. The PPP provides forgivable loans of up to $10 million per borrower that can be used for payroll, rent, and other costs. The program was then expanded by the Paycheck Protection Program and Health Care Enhancement Act in April 2020, and then again through the Consolidated Appropriations Act of 2021, with an additional $285 billion in funding being added to the program.
A borrower can apply for loan forgiveness once all loan proceeds have been used up until the maturity date of the loan. All or part of a PPP loan can be forgiven as long as the expenditures meet certain criteria. Otherwise, a PPP loan has an interest rate of 1% and a maturity of 2 or 5 years, depending on when it was issued. Regardless, loan payments are deferred for up to 10 months after the end of the covered period. PPP applicants do not have to provide collateral or personal guarantees, nor are they subject to loan fees.
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If you are interested in understanding how the forgiveness portion of the PPP Loan is calculated, what documentation you need to provide or which forgiveness application to fill out, the KHA Strategic Consulting team has dedicated resources to understanding this and are willing and available to assist you. Please reach out to understand how KHA might help you.
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