Beginning 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 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.
* Importantly the guidance notes that, due to likely high subscription, it is anticipated that 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.
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. Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program. 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 here on the Engs or SBA website, and submit the application with the required documentation to an approved lender that is available to process their application by June 30, 2020.
Applicants will need to provide lenders with payroll and tax documentation. There is no requirement that applicants try to obtain some or all of the loan funds from other sources. The sample form requires Applicant Ownership information for any individual owners of a business with greater than 20% ownership stakes, including questions regarding such individuals’ criminal history.
Last twelve months payroll divided by 12, then multiplied by 2.5. Subject to max annual salary of $100k, can include wages, vacation, sick pay, and benefits.
Loan proceeds can be used for:
**Payroll costs include:
Loans can be for up to two and a half months of average monthly payroll costs from the last year. That amount is subject to a $10 million cap. Most applicants will use the average monthly payroll for 2019. For a seasonal or new businesses you may elect to instead use average monthly payroll for the time period between Feb. 15, 2019 and June 30, 2019. For new businesses, average monthly payroll may be calculated using the time period from Jan. 1, 2020 to Feb. 29, 2020. Payroll costs will be capped at $100,000 annualized for each employee.
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 utilities payments over the eight weeks after getting the loan. As noted above, due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
Borrowers can 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. Borrowers must certify that the documents are true and that the forgiveness amount was used to keep employees and make eligible mortgage interest, rent and utility payments. The lender must make a decision on the forgiveness within 60 days.
Loan forgiveness will be reduced if:
Re-Hiring — Borrowers have until June 30, 2020 to restore full-time employment and salary levels for any changes made between Feb. 15, 2020 and April 26, 2020.