Payroll Protection Program
The CARES Act has expanded the eligibility criteria for borrowers to qualify for a Paycheck Protection Program loan. We will do best to answer the questions you may have regarding the program, application process, and other questions you might have to determine if this program is a fit for your business and how to apply for it.
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Have Questions About The Payroll Protection Program?
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Who can apply?
The CARES Act has expanded the eligibility criteria for borrowers to qualify for a Paycheck Protection Program loan. Any qualified small business, nonprofit organization, veterans organization, or tribal business is eligible to review a loan if the business employs 500 or less people.
What can the loan be used for?
• Payroll costs and employee commissions or similar compensations
• Insurance premiums and group healthcare benefits during paid sick, family, or medical leave
• Mortgage interest payments (but not prepayment or payment of mortgage principal)
• Commercial space rent and utilities
• Interest on any other debt obligations incurred before the covered period
How large can my loan be?
Loans can be for up to 2.5 times your average monthly payroll costs for the past year. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) at any lending institution that is approved to participate in the program through the existing U.S. Small Business Administration (SBA) 7(a) lending program and additional lenders approved by the Department of Treasury. This could be the bank you already use, or a nearby bank. There are thousands of banks that already participate in the SBA’s lending programs, including numerous community banks. You do not have to visit any government institution to apply for the program. You can call your bank or find SBA-approved lenders in your area through SBA’s online Lender Match tool. You can call your local Small Business Development Center or Women’s Business Center and they will provide free assistance and guide you to lenders.
I am an independent contractor or gig economy worker, am I eligible?
Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.
How can I use the money such that the loan will be forgiven and how much will be forgiven?
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums. If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, you can, but that portion of the loan will not be forgiven.
The purpose of the Paycheck Protection Program is to help you retain your employees, at their current base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If you still lay off employees, the forgiveness will be reduced by the percent decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If you have already laid off some employees, you can still be forgiven for the full amount of your payroll cost if you rehire your employees by June 30, 2020.
When is the application deadline for the Paycheck Protection Program?
Applicants are eligible to apply for the PPP loan until June 30th, 2020.
Am I responsible for interest on the forgiven loan amount?
No, if the full principal of the PPP loan is forgiven, the borrower is not responsible for the interest accrued in the 8-week covered period. The remainder of the loan that is not forgiven will operate according to the loan terms agreed upon by you and the lender.
We will be adding additional questions to this sections so check back regularly.