Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $349 billion to the Paycheck Protection Program to keep workers employed during the pandemic and economic downturn. The initiative provides 100% federally guaranteed loans to small businesses that may be forgiven if borrowers maintain their payrolls during the Covid19 crisis.

 

WHO IS ELIGIBLE?

• Businesses in operation as of February 15, 2020 with 500 or fewer employees. Includes non-profits, veterans organizations, tribal business concerns, sole proprietorships, independent contractors, and eligible self-employed and independent contractors.
• Affiliation rules may preclude some businesses from being considered “small.” Click here for additional information.
• Affiliation rules are waived for business concerns that employ 500 employees or less per physical location and is assigned a NAICS code beginning with 72.

 

WHAT ARE THE LOAN TERMS?

Maximum Loan Amount	Average monthly payroll costs x  2.5, limited to $10 million
Interest Rate	0.50% Fixed rate
Loan Term	Two years
Payment Deferral	Six Months
Collateral Requirement?	No
Personal Guarantee?	No

 

WHAT EXPENSES COUNT AS PAYROLL COSTS?

Included Payroll Costs	Salary, wages, commissions or similar compensation; payment of cash tip or equivalent; vacation, parental, family, medical, or sick leave; allowance for dismissal or separation; group health benefits; retirement benefits; and State of local taxes assessed on employee compensation.
Excluded Payroll Costs	Compensation for any employee over $100.0 thousand, prorated for the covered period; excluded payroll taxes, railroad retirement taxes, and income taxes; compensation for employees whose principal residence is outside of the US; and qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

 

OVER WHAT PERIOD IS AVERAGE MONTHLY PAYROLL CALCULATED?

Businesses in Operation February 15, 2019 – June 30, 2019	April 1, 2019 – March 31, 2020
Businesses not in Operation February 15, 2019 – June 30, 2019	January 1, 2020 – February 29, 2020
Seasonal Businesses	February 15, 2019 – June 30, 2019 or March 1, 2019 – June 30, 2019 (selected by borrower)

 

WHAT CAN THE LOAN PROCEEDS BE — USED FOR?

Payroll costs, including benefits; interest on mortgage obligations that were incurred before February 15, 2020; rent expense on lease agreements in force before February 15, 2020; and utilities that were in service before February 15, 2020.

 

HOW MUCH OF THE LOAN IS FORGIVABLE?

• Borrowers will be eligible for loan forgiveness on amounts spent on payroll costs, mortgage interest, rent, and utilities during the 8-week period following loan origination
• The amount of loan forgiveness will be reduced if you reduce full-time employee count or if you decrease salaries and wages by more than 25% for any employee that makes less than $100,000, prorated for the covered period. Note that businesses can include employee compensation up to the $100,000 cap.
• Treasury has also noted that due to likely high demand for the program, at least 75% of the forgiven loan amount must be used for payroll in order to receive the maximum forgiveness.

 

WHEN CAN YOU APPLY?

April 3, 2020 (April 10, 2020 for Self-Employed and Independent Contractors).

 

WHERE CAN YOU APPLY?

Any existing SBA approved lender. It is recommended to start with your current bank.

 

WHERE CAN I FIND THE LOAN APPLICATION?

Here.