SBA Paycheck Protection Program (PPP) | Business Guide
The Paycheck Protection Program (PPP), contained in The CARES Act, authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.
In summary:
• Loan terms will be the same for all borrowers.
• All businesses - including nonprofits, veterans organizations, Tribal Business concerns, sole proprietorships, self-employed individuals, and independent contractors with 500 or fewer employees that were in operation on Feb. 15, 2020, can apply.
• The lender will calculate the eligible loan amount using the tax documents submitted
• Loans carry a 0.50% fixed rate.
• Loans have a two-year term and no prepayment penalty.
• No collateral is required.
• No personal guarantee is required.
• Loan amounts will be forgiven as long as:
o The loan 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
o Employee and compensation levels are maintained.
• Payroll costs are capped at $100,000 on an annualized basis for each employee.
• Loan payments will be deferred for six months.
• The SBA's affiliation standards are waived for small businesses that:
o are in the hotel and food services industries which fall under NAICS code 72;
o are franchises in the SBA's Franchise Directory; or
o, receive financial assistance from small business investment companies licensed by the SBA.
• Lenders may not collect any fees from the applicants.
Starting on April 3, 2020, small businesses, including nonprofits and sole proprietorships, can apply for and receive loans to cover their payroll and certain other expenses through existing SBA lenders.
Starting on April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
Not more than 25% of the forgiven amount may be for non-payroll costs. The PPP program is open until June 30, 2020, so businesses are encouraged to apply as quickly as possible as there is a funding cap and lenders will need time to process the loans.
Application Process
Borrowers can apply through any existing SBA lender or through any participating federally insured depository institution, federally insured credit union, or Farm Credit System institution. Interested businesses and individuals should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.
Applicants will need to complete the Paycheck Protection Program loan application, which is available via the link at the bottom of this, and submit the application with the required documentation to an approved lender that is available to process their application by June 30, 2020.
Use of proceeds:
• Payroll costs, including benefits;
• Interest on mortgage obligations, incurred before Feb. 15, 2020;
• Rent, under lease agreements in force before Feb. 15, 2020; and
• Utilities, for which service began before Feb. 15, 2020.
Payroll costs include:
• Salary, wages, commissions or tips (capped at $100,000 on an annualized basis for each employee);
• Employee benefits including costs for vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payments required for the provision of group health care benefits including insurance premiums; and payment of any retirement benefit;
• State and local taxes assessed on compensation; and
• For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.
Loans can be for up to two months of average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap.
Borrowers will owe money when their loan is due if they use the loan amount for anything other than payroll costs, mortgage interest, rent, and utility payments over the eight weeks after getting the loan.
Loan Forgiveness
Borrowers may submit a request to the lender that is servicing the loan. The request must include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease and utility obligations.
Reduction of Forgiveness
Loan forgiveness will be reduced if:
• Full-time employee headcount is decreased
• Salaries and wages are decreased by more than 25% for any employee who made less than $100,000 annualized in 2019.
Re-Hiring - You have until June 30, 2020, to restore full-time employment and salary levels for changes made between Feb. 15, 2020, and April 26, 2020.
Loan Application:
https://www.sba.gov/sites/default/fil...
More Details:
https://sba.gov/funding-programs/loan...