Today marks the first day that businesses can apply for the $349 billion in Small Business Administration Paycheck Protection (PPP) loan/grant program authorized by the CARES Act. Businesses with 500 or fewer employees can apply, with some exceptions that currently do not apply to the apartment industry. NMHC/NAA are already working with lawmakers to add multifamily to the list of firms granted waivers.
The program is designed to encourage small business to keep their employees on the payroll by fully forgiving the loan if: all employees are kept on the payroll for eight weeks; employee and compensation levels are maintained; and the money is used for payroll, rent, mortgage interest or utilities.
Although the uses are broader than just payroll, the SBA advises that “due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.” The amount of loan forgiveness will be reduced if firms decrease their full-time employee headcount or reduce compensation by more than 25%.
If borrowers fail to meet the payroll test, the amount of the loan not forgiven must be repaid within two years at an interest rate of one percent. The Treasury Department has produced a detailed borrower information sheet with more information. Applications are due by June 30. NMHC has identified the NAICS codes relevant to multifamily firms for those who plan to apply.
We understand the initial rollout is challenging, but here is the information created by Federal agencies and other organizations to help companies understand it.
- SBA Resource Center: (Application and Information)
- Treasury Resource Center (Program Overview, Application, Information for Borrowers and more)
- U.S. Senate Small Business Owners Guide to the CARES Act (FAQ and Program Overview)
- U.S. Chamber Coronavirus Small Business Guide and Checklist
- Relevant NAISC Codes for Multifamily Operators (Required to Apply)
- IRS Guidance: FAQs: Employee Retention Credit under the CARES Act (Explains the overlap between the Paycheck Protection Program and Paid Leave Tax Credits among other things)