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SBA Paycheck Protection Program (PPP) COVID-19 Small Business Assistance


CARES Act: SBA Paycheck Protection Program (PPP)

The CARES Act, recently passed by the federal government, includes funding to help businesses keep their workers employed during the COVID-19 pandemic.

WHAT YOU NEED TO KNOW:

Is Your Business Eligible?

Program eligibility requirements are established by the SBA. Generally, to be eligible for the program, you must be:

  • Any business or non-profit 501(c)3 with fewer than 500 employees. This includes all employees (full-time, part-time, and any other status).

  • An individual that operates as a sole proprietor

  • An individual that operates as an independent contractor (applications accepted after April 10, 2020)

  • Operating as a business since February 15, 2020

What are the maximum loan amounts?

  • The maximum loan amount is determined based on criteria set forth by the SBA. Generally, the maximum loan your business qualifies for will be based on your average monthly payroll over the prior 12 months and multiplying that number by 2.5.

  • For sole proprietors, independent contractors, and self-employed individuals, the sum of any compensation that is a wage, commission, income, or similar compensation. (Not to exceed $100,000).

What is the Interest rate?

The interest rate for the loan is set by the SBA and is currently 1.00%.

What are the loan terms?

  • Loan allows for deferred payments up to 6 months

  • Repaid over a 2 year term

  • Portions of the loan principal amount may be forgiven by the SBA based on the rules and requirements set by the SBA

  • No collateral or personal guarantees are required

  • Terms and conditions are subject to change

What can I use the funds for?

Approved uses of proceeds include:

  • Payroll costs

  • 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

  • Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)

  • Rent (including rent under a lease payment)

  • Utilities

  • Interest on any other debt obligations that were incurred before the covered period

Note: Loan forgiveness may be affected by how a borrower uses the funds. You should be certain to consult with the SBA and your legal advisors prior to using any funds advanced under this program.

Does the Paycheck Protection Program (PPP) offer loan forgiveness?

Borrowers may be eligible to have their loan forgiven based on rules established by the SBA. Should you intend to seek full or partial loan forgiveness, you and your legal advisors should consult with SBA to confirm you are in compliance with any loan forgiveness requirements.

Application Deadline

Applications are accepted through June 30, 2020, or until funding provided by the CARES Act has been exhausted.

Documentation You Will Need Before Applying

  • A completed SBA PPP application

  • 2019 IRS quarterly 940, 941 or 944 payroll tax reports.

  • Payroll reports for a 12-month period (ending on your most recent payroll date), which will show the following information:

  • Gross wages for each employee, including officer(s) if paid W-2 wages

  • Paid time off for each employee

  • Vacation pay for each employee

  • Family medical leave pay for each employee

  • State and local taxes assessed on an employee's compensation

  • Documentation showing total of all health insurance premiums paid by the company owner(s) under a group health plan. Include all employees and the company owners.

  • Document the sum of all retirement plan funding that was paid by the company owner(s) (does not include funding that came from the employees out of their paycheck deferrals). Include all employees, including company owners. Also, include 401K plans, Simple IRA, SEP IRAs.

  • For independent contractors, any 2019 Form 1099

  • For sole-proprietors, a 2019 Form 1040 Schedule C

Additional Resources

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