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:
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)
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.
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
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
PDF version of the SBA PPP application to give you a head start identifying needed information
Read more about the Paycheck Protection Program
Coronavirus Emergency Loans Small Business Guide Checklist prepared by the U.S. Chamber of Commerce