All Small Business Owners, including self-employed, corporations,

partnerships, LLC, LLP, and non-profits may be

eligible for the Payroll Protection Program

 

PAYROLL PROTECTION PROGRAM

The Payroll Protection Program is a program which provides low interest loans to small businesses which may be fully or partially forgiven. In addition, the amount forgiven will not be subject to income taxes.

 ELIGIBILITY REQUIREMENTS

  • Company must have been in business as of February 15, 2020

  • The company must have less than 500 employees and meets the SBA size standard

  • Sole proprietors and unincorporated businesses qualify

  • Independent contractors qualify

  • 501(c)(3) organizations with fewer than 500 employees qualify

 LOAN CALCULATION

The maximum loan amount under the Paycheck Protection Program is the lesser of:

  • The average total monthly payments by the applicant for payroll costs** incurred during the 1-year period before the date on which the loan is made, multiplied by 2.5; plus

  •   the outstanding amounts of any Emergency Injury Disaster Loan (EIDL) obtained on or after January 31, 2020 which is to be refinanced under this loan;or $10,000,000

         **Payroll Costs: Payroll costs include the following:

  • Salary, wage, commission, or similar compensation ( payments to subcontractors)

  • Payment of cash tip or equivalent

  • Payment for vacation, parental, family, medical or sick leave

  • Allowance for dismissal or separation

  • Payment required for the provision of group health care benefits, including insurance premiums

  • Payment of any retirement benefits

  • Payment of state or local tax assessed on the compensation of employees

The sum of payments of any compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation and that is in an amount not exceeding more than $100,000 in 1 year, as prorated for the period beginning on February 15, 2020 and ending on June 30, 2020.

LOAN FORGIVENESS

The loan will be forgiven if the proceeds were used for qualifying costs (subject to audit) over the 8-week period from the date of the loan origination. A request for loan forgiveness must be made to the bank.

 Qualified Costs:

Qualified costs include the following:

  • Payroll (including subcontractor payments) plus state unemployment tax. Annual earnings cannot exceed $100,000, per employee

  • Rent

  • Utilities including electric, water, gas, internet, and phone

  • Group health insurance premiums

  • Interest on loans in existence prior to February 15, 2020

 REDUCTION IN LOAN FORGIVENESS

 The amount of loan forgiveness may be reduced if:

  • There is a reduction in full time equivalent employees when comparing the average number of full-time equivalent employees per month employed by the eligible recipient during the covered period^^ to:

The period beginning February 15, 2019 and ending on June 30, 2019, or

The period beginning January 1, 2020 and ending on February 29, 2020. The borrower selects the comparison period.

  • A reduction in pay of more than 25% of any individual full-time employee who, in 2019, did not receive a wage or salary at an annualized rate of more than $100,000.

^^Covered Period: The covered period is the 8-week period following the inception of the loan.

 The part of the loan which is not forgiven is to be repaid over 10 years with interest not to exceed 4%.

DOCUMENTATION REQUIRED BY LENDER

 Currently, there are no applications or regulations for this loan program.

 We believe the following documents will help you start the process quickly and efficiently, although each lender may have different requirements:

  • Employee payroll reports for the payroll periods ending after 02/15/19, 06/30/19, 01/01/20, and 02/29/20

  • Three most recent years of tax returns

  • Certifications of the following facts:

    • The uncertainty of current economic conditions makes it necessary for the loan request to support the ongoing operations of the recipient

    • Acknowledgement that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments

    • The eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative amounts applied for or received under a covered loan

    • During the period beginning February 15,2020 and ending December 31,2020 the eligible recipient has not received amounts under this subsection for the same purpose and duplicative amounts applied for or received under a covered loan

  •   Provide the lender with a list of the following monthly expenses:

    • Loan payments

    • Rent payments

    • Health insurance payments

    • Retirement benefits paid monthly

    • Utility bills

    • Monthly payroll costs over the last three months.

 When the loan is received, we recommend that the proceeds be placed in a separate checking account, and only Qualified Costs are paid from this account.

 Lenders are to prioritize the loan applications for the following borrowers:

  • Businesses in underserved and rural markets

  • Veterans and members of the military community

  • Businesses owned and controlled by socially and economically disadvantaged individuals

  • Businesses owned by wome

  • Businesses in operation for less than two years

 No collateral is required. The loans are non-recourse loans. No guarantees are required.