The United States Treasury and Small Business Administration
(SBA) issued guidance late in the day on March 31, 2020 updating
and clarifying certain portions of the CARES Act Payroll Protection
Program.
The Treasury's announcement confirms that all loans will
have identical features, including a fixed interest rate of .5% per
annum and a maturity term of 2 years.
Our previous alert referenced the text of the CARES Act bill
providing for loans with a 10-year maturity with an interest rate
not to exceed 4% per annum, but the Treasury's guidance lowered
the interest rate and maturity period.
Payroll Protection loans can be obtained in amounts of up to two
months of average monthly payroll costs from the last year plus an
additional 25% of that amount (i.e., 2.5 times the average monthly
amount), subject to a $10 million cap. The CARES Act was originally
unclear on how to treat employees making over $100,000, but the
guidance clarifies that "Payroll Costs" are subject
