The Paycheck Protection Program (PPP) Small Business Loan - A Quick Overview

We have been talking with all of our small business friends and partners over the last few weeks and trying to understand the ever-changing COVID-19 stimulus. As we find information we will continue to share it here and on our social media sites.





The Coronavirus Aid, Relief, and Economic Security Act (CARES) is making $350 billion in paycheck protection loans available to small businesses, with individual businesses eligible for up to $10 million in forgivable loans. 


Who will qualify?


In general, you're eligible for the PPP loans if your company has fewer than 500 employees and was in business as of February 15, 2020. Unlike with traditional U.S. Small Business Administration loans, nonprofits, sole proprietors, people who are self-employed, and people who make their income as independent contractors are eligible.


There had been some confusion about whether having credit available elsewhere makes you ineligible, but we now know that you're eligible regardless of whether you have available credit elsewhere


What is the maximum amount I can borrow?


The amount any small business is eligible to borrow is 250 percent of their average monthly payroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payroll expenses and any additional amounts for making payments towards debt obligations. This 8 week period may be applied to any time frame between February 15, 2020 and June 30, 2020. Seasonal business expenses will be measured using a 12-week period beginning February 15, 2019, or March 1, 2019, whichever the seasonal employer chooses.


How much of my loan will be forgiven?


The purpose of the PPP 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.


Which banks will be participating in the PPP?


A variety of financial institutions will be participating, though many of those details haven't been made public yet. The best thing you can do is reach out to your bank now to get more information. If you don't meet their criteria, check with another bank. 


When is the application deadline for the PPP?

 

Applicants are eligible to apply for the PPP loan until June 30th, 2020.


What documents do I need to start pulling together for the loan application?


This was provided to us from PNC Bank:


While we wait for the SBA to provide details on the Paycheck Protection Program (PPP) you can begin to gather information for your loan application we believe that the following information may be required:


❑ 2019 IRS Quarterly 940, 941 or 944 payroll tax reports


❑ Payroll reports for a twelve-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


❑ 1099s for independent contractors for 2019


❑ 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) (do not include funding that came from employees out

of their paycheck deferrals).


  • Include all employees and the company owners

  • Include 401K plans, Simple IRA, SEP IRA’s


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