SBA 7(a) CARES Paycheck Protection Program Loans

With this program, rates are set at 1% and terms will go as far out as 2 years for any balance not forgiven.

If all employees are kept on payroll, businesses will be able to apply for forgiveness on any amount spent during the 8 week period post loan closing to cover payroll cost, rent payments or mortgage interest, and utility payments. Any amount spent after the 8 week period will not qualify for forgiveness. It is also anticipated that not more than 25% of the forgiven amount may be used for non-payroll costs.

A major reason for the proposed Paycheck Protection Program is to help as many business as possible keep as many individuals employed as possible, so qualifying for principal forgiveness is heavily based on staff and pay rate retention, though there are other conditions that also apply:

1. Funds received through this program must be spent on payroll, debt, and mortgage/rent expenses. It is anticipated that not more than 25% of the forgiven amount may be used for non-payroll costs.
2. To be eligible for full forgiveness, employee count cannot be reduced (as compared to the previous year)
3. To receive full forgiveness, you cannot have a reduction in any employee’s pay that goes beyond 25 percent of the prior year’s compensation (reduction in salaries over $100,000 are not considered in this calculation)
4. Full forgiveness can be achieved if you re-hire employees furloughed or laid off at any point between 2/15/2020 and 4/26/2020, so long as they are rehired by June 30, 2020.
5. Forgiveness is conditional on your employee count not being reduced over the next year.

If you don’t meet the full employment requirements, you are still eligible for partial loan forgiveness.  However, the amount forgiven will be proportionately reduced based on the number of employees you were unable to retain or rehire.

Approval amounts will be based on 2.5X your prior average monthly payroll costs over the last year, up to $10 Million.

Payroll costs include:

1. Compensation via salary, wages, commission and cash tips
2. PTO and Leave including vacation, parental, family, medial and sick leave
3. Benefits payment for group health care and insurance premiums
4. Retirement Benefits
5. State and local employment taxes

This program will end when it reaches its cap of $349 billion in issued loans, or on June 30th, 2020 if the cap is not reached by then.

Payroll costs are comprised of:

• Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)
• Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provision of group health care benefits including insurance premiums; and payment of any retirement benefit
• Stat and local taxes assessed on compensation
• For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee

Yes. As part of your application, you will need to certify in good faith that:

• Current economic uncertainty makes the loan necessary to support your ongoing operations
• The funds will be used to retain workers and maintain payroll or to make mortgage, leases, and utility payments
• You have not and will not receive another loan under this program
• You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the 8 weeks after getting this loan
• Loan forgiveness will be provided for the sum of the documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs
• All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law