Ten Things To Know About 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. What’s important to know is that all loan terms will be the same for everyone.
The loan amounts will be forgiven as long as the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the load is made. Also, employee compensation levels are maintained.
- When can I apply?
Starting April 3, 2020, small businesses and sole proprietorships can apply and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
2. 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. Visit www.sba.gov for a list of SBA lenders.
3. Who can apply?
All businesses — including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors — with 500 or fewer employees can apply.
4. What do I need to apply?
You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender that is available to process your application by June 30, 2020. Click here for the application.
5. How long will this program last?
Although the program is open until June 30, 2020, you should apply as quickly as you can because there is a funding cap and lenders need time to process your loan.
6. How many loans can I take out under this program?
7. What can I use these loans for?
Proceeds from these loans can be used 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
8. What counts as payroll costs?
- Salary, wages, commission 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
9. How large can my 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.
If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.
10. When is my loan due?
In two years.
Source: treasury.gov, Payroll Protection Fact Sheet For Borrowers