Paycheck Protection Program
Where can I apply for the Paycheck Protection Program?
You can apply for the Paycheck Protection Program (PPP) at any lending institution that isapproved to participate in the program through the existing U.S. Small Business Administration(SBA) 7(a) lending program and additional lenders approved by the Department of Treasury. Thiscould be the bank you already use, or a nearby bank. There are thousands of banks that alreadyparticipate in the SBA’s lending programs, including numerous community banks. You do nothave to visit any government institution to apply for the program. You can call your bank or findSBA-approved lenders in your area through SBA’s online Lender Match tool. You can call yourlocal Small Business Development Center or Women’s Business Center and they will provide freeassistance and guide you to lenders.
Who is eligible for the loan?
You are eligible for a loan if you are a small business that employs 500 employees or fewer, or ifyour business is in an industry that has an employee-based size standard through SBA that ishigher than 500 employees. In addition, if you are a restaurant, hotel, or a business that fallswithin the North American Industry Classification System (NAICS) code 72, “Accommodation andFood Services,” and each of your locations has 500 employees or fewer, you are eligible. Tribalbusinesses, 501(c)(19) veteran organizations, and 501(c)(3) nonprofits, including religiousorganizations, will be eligible for the program. Nonprofit organizations are subject to SBA’saffiliation standards. Independently owned franchises with under 500 employees, who areapproved by SBA, are also eligible. Eligible franchises can be found through SBA’s FranchiseDirectory.
I am an independent contractor or gig economy worker, am I eligible?
Yes. Sole proprietors, independent contractors, gig economy
What is the maximum amount I can borrow?
The amount any small business is eligible to borrow is 250 percent of their average monthlypayroll expenses, up to a total of $10 million. This amount is intended to cover 8 weeks of payrollexpenses and any additional amounts for making payments towards debt obligations. This 8 weekperiod may be applied to any time frame between February 15, 2020 and June 30, 2020. Seasonalbusiness expenses will be measured using a 12-week period beginning February 15, 2019, orMarch 1, 2019, whichever the seasonal employer chooses.
How can I use the money such that the loan will be forgiven?
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, andexisting interest payments on mortgages, rent payments, leases, and utility service agreements.Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wagesand cash tips, paid sick or medical leave, and group health insurance premiums. If you would like to use the Paycheck Protection Program for other business-related expenses, like inventory, youcan, but that portion of the loan will not be forgiven.
When is the loan forgiven?
The loan is forgiven at the end of the 8-week period after you take out the loan. Borrowers willwork with lenders to verify covered expenses and the proper amount of forgiveness.What is the covered period of the loan?The covered period during which expenses can be forgiven extends from February 15, 2020 toJune 30, 2020. Borrowers can choose which 8 weeks they want to count towards the coveredperiod, which can start as early as February 15, 2020.
How much of my loan will be forgiven?
The purpose of the Paycheck Protection Program is to help you retain your employees, at theircurrent base pay. If you keep all of your employees, the entirety of the loan will be forgiven. If youstill lay off employees, the forgiveness will be reduced by the percent decrease in the number ofemployees. If your total payroll expenses on workers making less than $100,000 annuallydecreases by more than 25 percent, loan forgiveness will be reduced by the same amount. If youhave already laid off some employees, you can still be forgiven for the full amount of your payrollcost if you rehire your employees by June 30, 2020.
Am I responsible for interest on the forgiven loan amount?
No, if the full principal of the PPP loan is forgiven, the borrower is not responsible for the interestaccrued in the 8-week covered period. The remainder of the loan that is not forgiven will operateaccording to the loan terms agreed upon by you and the lender.What are the interest rate and terms for the loan amount that is not forgiven?The terms of the loan not forgiven may differ on a case-by-case basis. However, the maximumterms of the loan feature a 10-year term with interest capped at 4 percent and a 100 percent loanguarantee by the SBA. You will not have to pay any fees on the loan, and collateral requirementsand personal guarantees are waived. Loan payments will be deferred for at least six months andup to one year starting at the origination of the loan.
When is the application deadline for the Paycheck Protection Program?
Applicants are eligible to apply for the PPP loan until June 30th, 2020.I took out a bridge loan through my state, am I eligible to apply for the Paycheck ProtectionProgram?Yes, you can take out a state bridge loan and are still be eligible for the PPP loan.If I have applied for, or received an Economic Injury Disaster Loan (EIDL) related to COVID19 before the Paycheck Protection Program became available, will I be able to refinanceinto a PPP loan?Yes. If you received an EIDL loan related to COVID-19 between January 31, 2020 and the dateat which the PPP becomes available, you would be able to refinance the EIDL into the PPP forloan forgiveness purposes. However, you may not take out an EIDL and a PPP for the samepurposes. Remaining portions of the EIDL, for purposes other than those laid out in loanforgiveness terms for a PPP loan, would remain a loan. If you took advantage of an emergencyEIDL grant award of up to $10,000, that amount would be subtracted from the amount forgivenunder PPP.
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