This program is for any small business with less than 500 employees (including sole proprietorship's, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
Small businesses in the hospitality and food industry with more than one location could also be eligible if their individual locations employ less than 500 workers.
Contact your bank to determine if they are an SBA lender or visit this link. You bank will be able to walk you through their application process.
Visit this link for guidance from the SBA on the Paycheck Protection Program.
The US Chamber of Commerce issued this document regarding the details of Paycheck Protection Program US Chamber of Commerce COVID-19 Emergency Loan Guide .
The US Department of Treasury has additional information on their site via the link provided below, from top-line overview of the program, lender and borrower information as well as the application for the borrower.
Paycheck Protection Program (PPP) Flexibility Act
June 5, 2020
President Trump signed the Paycheck Protection Program (PPP) Flexibility Act which made some significant changes in how the PPP loan can be used as well as forgiveness.
We will be updating our PPP Loan Forgiveness guidance in the coming days and weeks as more guidance on the changes to PPP loan forgiveness is provided by the SBA; however, here are the highlights of the recent changes:
SBA and Treasure Release Paycheck Protection Program Loan Forgiveness Application
May 15, 2020
The SBA in consultation with the Department of the Treasury, released the Paycheck Protection Program (PPP) Loan Forgiveness Application and detailed instructions for the application. The link below will take you to the details as well as the application.
Visit the SBA link direct to Paycheck Protection Program Loan and Forgiveness Details
The SBA’s PPP loans are easy to qualify for, have a low interest rate (1%) and eligible for complete “forgiveness.” This means that you may not owe anything at the end of the eight (8) week period after your loan is funded. You can borrow up to 2.5 times your monthly payroll cost. However, if you received a PPP loan, you must apply for forgiveness within 90 days after the 8 week period ends.
The SBA has not finalized the guidance and criteria for full forgiveness of these loans. This is NOT an all inclusive list you must consult with your lender, the SBA as well as our resource page for updates.
First, you must spend the loan on approved expenses in order for it to be eligible for forgiveness. The loan is designed to help with payments that many business owners are struggling with right now, including:
If you use any part of your PPP loan for expenses not on this list, that amount cannot be forgiven. Again, only 25% of your loan can be used for the non-payroll costs mentioned above if you want the full loan amount to be forgiven.
Lastly, in order to qualify for full loan forgiveness, you must maintain your employee headcount and their compensation levels. If you’ve made any staffing or wage reductions between February 15, 2020 and the end of the eight-week period following disbursement of your loan, you have until June 30, 2020 to rehire employees and restore salary levels. Otherwise, your forgiveness amount will be reduced.
There are many questions about the forgiveness criteria that still require clarification from the SBA and government so you should check regularly for updates and confirm with your lender for their specific requirements.
According the loan provisions, forgivable payroll costs include:
Preparing for Loan Forgiveness
Reduction in Forgiveness
If an employee’s wages are reduced by more than 25% during the 8 week period compared to a look-back period, the amount forgiven will be reduced. If your employee headcount is reduced as compared to a look-back period, the amount forgiven will be reduced. The CARES Act states that as long as you rehire your employees and restore wages by June 30, 2020, reductions of your forgiveness amount can be waived. Guidance on this not been released, so check with your lender for updates.
If you spend more than 25% of your loan on non-payroll costs, you may not be eligible for forgiveness. Guidance on this not been released, so check with your lender for updates.
Lenders have 60 days from that date that you apply for forgiveness to decide whether or not you qualify. If all or a portion of your loan is not forgiven, the un-forgiven portion will turn into a 1% loan for two (2) years and payments will be deferred for six (6) months. Any forgiven loans will be excluded from gross income for tax purposes.
UPDATE: May 3, 2020, the SBA clarified that if a terminated employee rejects a good faith, written offer from the borrower to re-hire the employee at the same salary and for the same number of hours, loan forgiveness will not be reduced with respect to that employee, provided that the borrower has documented the offer and the employee’s rejection of the offer.
As much of the guidance on loan forgiveness is still pending, please be sure to check back here often as well as following up with your lender, the SBA and Government.