Interest on mortgage obligations, incurred before February 15, 2020;
Rent, under lease agreements in force before February 15, 2020; and
Utilities, for which service began before February 15, 2020.
The CARES Act was unclear on employees making over $100,000. The Treasury has clarified that any employee making over $100,000 can be included, but their salaries, wages, commissions, or tips will be capped at $100,000 on an annualized basis.
The proceeds are used to cover payroll costs and most mortgage interest, rent, and utility costs over the eight week period after the loan is made; and
Employee and compensation levels are maintained.
The Treasury has added that, due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Terms: What are the Key Terms of the Loan?
The interest rate will be a 0.50% fixed rate with a two-year term (with no prepayment penalties or fees).
Required Certifications: What Must the Applicant Certify?
The applicant must certify a number of things including that the loan is necessary due to the economic uncertainty and funds will be used for the purposes listed above. A full list of the certifications are included on the application.
Signatories: Who Must Sign the Application?
Sole Proprietorship – Sole Proprietor;
Partnership – All general partners and any limited partner owning 20% or more of the equity of the firm;
Corporation – All owners of 20% or more of the corporation;
LLC’s – All members owning 20% or more of the company; and
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.