The Paycheck Protection Program (PPP) was a federal loan program established in 2020 under the CARES Act to help small businesses keep their employees on payroll during the COVID-19 pandemic. It authorized forgivable loans to small businesses, self-employed workers, nonprofits, and tribal businesses to cover payroll costs and certain other expenses like mortgage interest, rent, and utilities for up to 8 weeks after the loan was made
. Key features of the PPP loan include:
- Loan amount: Up to 2.5 times the applicant's average monthly payroll costs, capped at $10 million per loan
- Eligible costs for forgiveness: Payroll costs (including wages, benefits, and certain taxes), mortgage interest, rent, and utilities. At least 75% of the forgiven amount must be used for payroll
- Forgiveness: Loans are fully or partially forgiven if the business maintains employee and compensation levels during the covered period
- Interest rate: 1%, with no collateral or personal guarantees required
- Loan maturity: Two years for loans approved before June 5, 2020, and five years for loans approved after that date
- Payment deferral: Payments deferred until loan forgiveness is approved or 10 months after the covered period ends if forgiveness is not requested
- Application: Businesses applied through eligible private lenders with documentation of payroll and expenses
The PPP officially ended on May 31, 2021, but existing borrowers may still apply for loan forgiveness
. The program aimed to prevent layoffs and business closures during the pandemic, though some analyses suggest it was costly and not as efficient at saving jobs as other relief efforts
. Nonetheless, it provided critical financial support to millions of small businesses during the crisis
