The CARES Act’s Paycheck Protection Program Loan Guarantee offers small businesses a source of assistance during this unprecedented time. Under this program, the SBA backs small-business loans through local lenders.
The Paycheck Protection Program (“PPP”) authorized $349 billion in forgivable loans in the first round of disbursements which launched on April 3, 2020, and an additional $320 billion available in a second round, starting Monday, April 27, 2020. All loan terms will be the same for everyone. The loan amounts will be forgiven as long as:
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At least 75% of the loan proceeds are used to cover payroll costs, while the rest can be used to cover mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
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Employee and compensation levels are maintained.
Payroll costs are capped at $100,000 on an annualized basis for each employee. Due to the likely high subscriptions, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. Loan payments will be deferred for 6-months.
Where can I apply?
You can apply through any existing SBA lender (such as Country Bank) or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
Who can apply?
All businesses – including nonprofits, Veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries SBA Employee-Based Size Standards
What do I need to apply?
You will need to complete the Paycheck Protection Program Loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Below is more information on submitting your application to Country Bank.
Please complete a Paycheck Protection Worksheet in conjunction with your application to ensure everything is returned with the necessary information:
What other documents will I need to include with my application?
- Copies of payroll tax reports filed with the IRS (including Forms 941, 940, state income and unemployment tax filing reports) for the entire year of 2019 and the first quarter of 2020 (if available).
- Copies of payroll reports for each pay-period in the preceding 12-months. Such reports should include gross wages – including PTO (this might include Vacation, Sick, and other PTO). This includes payroll reports through the pay-period preceding the origination of the SBA loan.
- Documentation reflecting the health insurance premiums paid by the company under a group health plan, including owners of the company for the immediately preceding 12-months prior to the date of the SBA loan origination. Copies of the monthly invoices should be sufficient.
- Documentation of all retirement plan funding by the employer for the immediately preceding 12-months. Copies of work papers, schedules, and remittances to the retirement plan administrator should be sufficient.
Do I need to first look for other funds before applying to this program?
No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement).
Loan Forgiveness
On May 15th, the SBA released initial guidance and requirements for those PPP loan customers who wish to request that some or all of their PPP loan be forgiven.
The loan forgiveness application form and step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness can be found on the SBA’s website.
The SBA still intends to publish additional rules and guidance on the program’s forgiveness provisions so we recommend you check their website often as it is the most current and official source for the latest PPP loan updates.
We will continue to provide you with updates as we are made aware of them.
