The Treasury Department has made the Paycheck Protection Program (PPP) coronavirus loan terms less favorable for small businesses than initially thought.
The forgivable loan program is considered as a core component of the $2.2 trillion coronavirus relief package.
The loans at issue are being made through the Paycheck Protection Program, which offers up to $10 million in forgivable loans to businesses with 500 or fewer employees
The program, which officially opened for many borrowers on Friday morning, will dole out up to $349 billion to ailing small businesses to help cover costs like payroll, rent and utilities. The loans are made through lenders approved by the Small Business Administration and other institutions.
In initial guidance, the Treasury Department had said banks would charge a 0.5% fixed interest rate and that a loan’s unforgiven portion could be repaid over 10 years.
However, loans now carry a higher interest rate — 1% — and come due in a much shorter period — two years — than originally stipulated, according to Treasury guidance released Thursday.