With the recent passing of the CARES Act, significant economic relief is on its way to support small businesses through the Paycheck Protection Program (PPP). This program authorizes up to $349 billion in forgivable loans to small businesses to help with payroll costs and operational business expenses incurred during the COVID-19 pandemic. All loan terms will be the same for everyone.

The PPP eliminates many of the requirements of a typical SBA loan and expands the types of businesses that are eligible for relief. The SBA continues to provide guidance regarding this program. Please check back frequently for updates.

Below are more details on the program.

Please note the SBA is unable to accept new loan applications for the Paycheck Protection Program or approve additional lenders due to exhausted funds. In the instance the SBA receives more funding from the federal government, the Credit Union will continue to do all we can to make this program available to our Members.

Who can apply?

The SBA is unable to accept new loan applications for the Paycheck Protection Program or approve additional lenders due to exhausted funds. In the instance the SBA receives more funding from the federal government, the Credit Union will continue to do all we can to make this program available to our Members.

What do I need to apply?

Begin collecting the following documentation to support your application:

  • Payroll reports for 2019 and 2020 year-to-date showing the following by employee and/or officers:
    • Gross wages
    • Paid time off
    • Paid vacation
    • Pay for family medical leave
    • State and local taxes (form 940, 941 or 944)
  • Health insurance premiums paid by the employer under a group health plan
  • Sum of all retirement plan funding contributed by the employer (include 401K plans, Simple IRA & SEP IRAs)
What can I use these loans for?

The proceeds from these loans are to be used towards the following:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020.
What counts as payroll costs?

Payroll costs include:

  • 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; and
  • 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 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.

What types of businesses 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. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries. Click HERE for more info.

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

Business Operations

Covers business operations from 2/15/2020 – 6/30/2020; the loan must be originated by 6/30/2020. Each applicant must provide evidence the business was in operation prior to 2/15/2020.

How much of my loan will be forgiven?

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
  • Level of Payroll: 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.
  • Re-Hiring: 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.
How can I request loan forgiveness?

You can submit a request to the relationship manager that is servicing the loan. The request will include 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 relationship manager must make a decision on the forgiveness within 60 days of the request.

How long will this program last?

Although the program is open until June 30, 2020, we encourage you to apply as quickly as you can because there is a funding cap.

How many loans can I take out under this program?

Only one.

What is my interest rate?

1% fixed rate.

When do I need to start paying interest on my loan?

All payments are deferred for 6 months; however, interest will continue to accrue over this period.

When is my loan due?

In 2 years.

Can I pay my loan earlier than 2 years?

Yes. There are no prepayment penalties or fees.

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.

Please Note: If the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

What do I need to certify?

As part of your application, you 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, lease and utility payments.
  • You have not and will not receive another loan under the PPP program.
  • You will provide your relationship manager 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 eight weeks after receiving this loan.
  • Loan forgiveness will be provided for the sum of 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.
  • You acknowledge that the relationship manager will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge and agree that the relationship manager can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

Date Last Updated: April 2, 2020