Paycheck Protection Program (PPP) FAQ

What is The Paycheck Protection Program (“PPP”)?

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. It’s designed to provide a direct incentive for small businesses to keep their workers on the payroll.

FAQ

What is the criteria for loan forgiveness?

  • The loan proceeds must be used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made.
  • Employee salary levels must be maintained. Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019. 
  • Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

Payroll costs are capped at $100,000 on an annualized basis for each employee and loan payments will be deferred for 6 months.

PPP

How can I request loan forgiveness?

You can submit a request to the lender that is servicing the loan. The request must include the following:

  • Documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations.
  • You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.
  • The lender must make a decision on PP forgiveness within 60 days.

When can I apply?

  • Starting April 3, 2020, Small businesses and sole proprietorships started applying on April 3, 2020.
  • starting April 10, 2020, independent contractors and self-employed individuals can start applying for PPP loans through existing SBA lenders. 
  • Other regulated lenders will be available to make these PPP loans as soon as they are approved and enrolled in the program.

Where can I apply?

  • You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Please consult with your local lender as to whether it is participating.
  • Find additional information at GrantWatch.com.

Who can apply?

Any business with 500 or fewer employees can apply, this includes:

  • 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. Read more about the SBA Size standards here.

What do I need to apply?

What can I use these loans for?

  • Payroll costs, including benefits; 
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020;
  • Utilities, for which service began before February 15, 2020.

What counts as payroll costs?

  • 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 provisions of group health care benefits including insurance premiums; and payment of any retirement benefit;
  • State 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.

How large can my PPP loan be?

  • Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. Seasonal or new business, will use different applicable time periods for your calculation.

What is my interest rate & repayment schedule?

  • 1.00% fixed rate.
  • All payments are deferred for 6 months; however, interest will continue to accrue over this period.
  • Your loan is due in 2 years
  • There are no prepayment penalties or fees so you may repay the loan early.

Finally:

Do I need to pledge any collateral for these loans?
No. No collateral is required.
Do I need to personally guarantee this loan?
No. There is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.