Paycheck Protection Program

The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy to snap-back quicker after the crisis. PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.

PPP FAQ’s

QUESTION: What types of businesses are eligible for a PPP loan?

Answer:

• Businesses and entities must have been in operation on or before February 15, 2020.
  
• Small businesses (500 or fewer employees, with some exceptions to larger)
  
• 501(c)(3) nonprofit organizations
• 501(c)(19) veterans organization
• Tribal businesses described in section 31(b)(2)(C) that have fewer than 500 employees or fewer employees than established by the relevant industry code.
  
• Individuals who operate as sole proprietors, independent contractors, and eligible self-employed individuals.
  
• Any business that employs not more than 500 employees per physical location of the business and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived.
  
• Affiliation rules are also waived for any businesses operating as a franchise that is assigned a franchise identifier code by the Administration, and companies that received funding through a Small Business Investment Company.

QUESTION: What are affiliation rules?

Answer:

Affiliation rules are used by the SBA in deciding whether a business’s affiliations (think related businesses) preclude them from being considered “small.” The SBA, in most circumstances, considers affiliation to exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. For more information about the SBA’s rules on “Affiliation” please see this link.

QUESTION: What types of non-profits are eligible?

Answer:

• With a few notable exceptions, most 501(c)(3) non-profits with 500 employees or fewer will be eligible. To see if your non-profit qualifies, check the link below, you will need the 6-digit North American Industry Classification Code for your business.
  

Link: https://www.sba.gov/size-standards/

QUESTION: How is the loan size determined?

Answer: The maximum loan size is always $10 million. The exact calculation for your eligible loan size will depend on the following:

• If your business was operational between February 15, 2019 – June 30, 2019, your maximum loan amount will be equal to 250 percent (250%) of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can elect to choose March 1, 2019 as your period start date.
  
• If your business was not operational between February 15, 2019 – June 30, 2019, then your maximum loan amount is equal to 250 percent (250%) of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
  
• If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you may add the outstanding loan amount to the payroll sum.

QUESTION: What costs are eligible for payroll?

Answer:

• Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
  
• Payments for sick leave, vacation, parental, family, or medical
  
• Allowance for dismissal or separation
  
• Payments required for group health care benefits, including insurance premiums
  
• Payments for most retirement benefits
  
• Payments for State or local tax assessed on the compensation of employees

QUESTION: What costs are not eligible for payroll?

Answer:

• Employee/owner compensation over $100,000
• Compensation for employees whose principal place of residence is located outside of the U.S.
• Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
• Sick pay and family leave for which a credit is already provided for under the linked Families First Coronavirus Response Act (see sections 7001 and 7003)

QUESTION: What are allowable uses of loan proceeds?

Answer:

• Payroll costs as described in the “What costs are eligible for payroll” section above.
  
• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
• Employee salaries, commissions, or similar compensations with the noted exclusions in the “What costs are not eligible for payroll” section directly above.
  
• Payments of interest on any mortgage obligation (NOTE: the prepayment of or payment of principal on a mortgage obligation is expressly excluded)
  
• Rent (including rent under a lease agreement)
• Utilities
• Interest on any other debt obligations that were incurred before the covered period

QUESTION: What are the loan terms, interest rate, and associated fees?

Answer:

• Maximum term for PPP loans: 10 years
• Maximum interest rate: 4%
  
• Loan Fees: Zero
  
• Prepayment Fee: Zero
  
• Application Fees: The SBA will establish application fees caps for lenders that charge

QUESTION: How is the forgiveness amount calculated?

Answer: Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):

• Payroll costs + any payment of interest on any covered mortgage obligation (excluding any prepayment or payment of principal on a covered mortgage obligation) + any payment on any covered rent obligation + any covered utility payment.

QUESTION: How do I get forgiveness on my PPP loan?

Answer: In order for any forgiveness to apply to your PPP loan, you must provide your lender with an application that includes the following:

• Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings
• Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
• Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and accurate, and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

QUESTION: What happens after the forgiveness period?

Answer: Any loan amounts that are not forgiven within one year from the date a PPP loan is disbursed are carried forward as an ongoing loan with max terms of 10 years and maximum interest rate of 4%. An important note, deferment of any principal and interest on PPP loans (up to 6-12 months) is calculated from the date of disbursement of the loan and does not restart upon any determination of forgiveness or any loan amount carried forward.

QUESTION: Can I get more than one PPP loan?

Answer: No. Each businesses entity receiving a PPP loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans being made to the same entity.

QUESTION: What kind of lender can I get a PPP loan from?

Answer: All current SBA 7(a) lenders (learn more about 7(a) lending here) are eligible lenders for PPP. The Department of Treasury will also be authorizing new lenders, including nonbank lenders, to help meet the needs of small business owners.

QUESTION: How does the PPP loan coordinate with SBA’s existing loans?

Answer: Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs).

QUESTION: How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?

Answer: Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan. More on the specifics of those programs can be found here:

• Emergency Economic Injury Grants
• Small Business Debt Relief