Paycheck Protection Program
**Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive PPP loans.
**Starting April 10, 2020, independent contractors and self-employed individuals can apply for & receive PPP loans.
1. Eligibility:
i) All businesses described in the Small Business Act with 500 or fewer employees may apply.
2. Applications for small businesses and sole proprietorships can apply for / receive loans to cover payroll and other expenses through SBA lenders. Other regulated lenders will be allowed to make these loans once they are approved and enrolled in the program.
3. What is needed to apply?
a. Complete the Paycheck Protection Program loan application with all required documentation to an approved vendor who can process your application by June 30, 2020. You will also need to provide payroll documentation to the lender. These documents include:
i. Payroll reports for 2019 & 2020 YTD showing the following for employees and officers:
1. Gross wages
2. Paid time off
3. Paid vacation
4. Pay for family medical leave
5. State & local taxes (forms 940, 941, 944)
6. 1099s for contractors (if applicable)
ii. Completed 2019 tax return or 2019 year-end Profit & Loss and Balance Sheet
iii. Documentation showing funds received from an Economic Injury Loan since 1/31/2020. Payments for group health care benefits, including premiums paid in 2019 and 2020 YTD. Payment of any retirement benefits paid in 2019 and 2020 YTD.
iv. NOTE: Payroll costs include salary, wages, commissions, tips (capped at $100,000 per employee per year), employee benefits (vacation, parental, family, medical, or sick leave), severance payments, health insurance premiums, retirement benefits, and state and local taxes on contractors. For sole proprietors or contractors: wages, commissions, income.
b. You can request loan forgiveness by submitting a request to the lender servicing your loan. The request must include documentation verifying the number of full-time employees and pay rates, as well as all payments on eligible mortgage, lease, and utility expenses. You must certify the documentation is accurate and true, and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender has 60 days to make a decision on forgiveness.
i. You will owe money on the loan if you use the loan amount for anything other than payroll, mortgage, rent, and utilities expense over a period of 8 weeks after getting the loan. Due to the probable high subscription, it is anticipated that no more than 25% of the forgiven amount can be for non-payroll costs.
ii. You will also owe if you do not maintain your staff and your payroll. Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
iii. Your forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee making less than $100,000 annualized in 2019.
iv. You will have until June 30, 2020 to reclaim your full-time employment and salary levels for any changes made between 2/15/2020 and 4/26/2020.
c. Additional Details
i. The interest rate is 0.50%. All payments will be deferred for 6 months, but interest will accrue over this period. Loans are due in 2 years, but there are no prepayment penalties or fees.
ii. No collateral is required, and loans are not required to be personally guaranteed. However, if you use the funds for fraudulent purposes, the US Government will pursue criminal charges.
