We're In This Together / Government Assistance / Paycheck Protection Program
What is the Paycheck Protection Program (PPP)?

It’s financial assistance through a federal guarantee of 100% for small business interruption loans made by 7(a) lenders of up to $10 million (loan amount is tied to a payroll amount formula). This loan can be applied towards:

  • Interest on mortgage obligations, incurred before February 15, 2020
  • Rent, under lease agreements in force before February 15, 2020
  • Utilities under service that began prior to February 15, 2020
  • Payroll costs, including benefits

In clarification released by the Department of Treasury, if you are a SP, SM-LLC, or other self-employed individual, the proceeds of the PPP loan may be used for the following:

  • Owner compensation replacement, calculated based on 2019 net profit to include health insurance payments
  • If you have employees, payroll costs for employees whos principal place of residence is in the United States to include health insurance payments
  • Mortgage interest payments (but not mortgage prepayments or principal payments) on any business mortgage obligation on real or personal property
  • Interest payments on any other debt obligations that were incurred before February 15, 2020
  • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020 (maturity will reset to PPP’s maturity of two years).
What can be Included in Payroll Costs?
  • Salary, wages, or commissions capped at $100,000 on an annualized basis for each employee
  • Employee benefits including parental, family, medical, sick, or vacation leave, allowance for separation or dismissal, payments required for the provisions of group health care benefits including insurance premiums, and payment of retirement benefits
  • State and local taxes assessed on compensation
  • For self-employed, sole proprietor, or independent contractors: wages, commissions, income, or net earnings, capped at $100,000 on an annualized basis. (For most sole proprietorships, this is the amount from line 31 of your 2019 Schedule C (or the net income from a 2019 profit and loss statement if you have not yet filed your taxes.)
EXCLUDED Payroll Cost:
  1. Compensation of an individual employee in excess of an annual salary of $100,000, as prorated for the period February 15, to June 30, 2020
  2. Payroll taxes, railroad retirement taxes, and income taxes
  3. Any compensation of an employee whose principal place or residence is outside of the United States
  4. Qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (Public Law 116–5 127); or qualified family leave wages for which a credit is allowed under section 7003 of the Families First Coronavirus Response Act (https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf)


Is there a Cap on the Loan?

Loans can be made for up to two months of your average monthly payroll costs from the last year plus 25%. Payroll costs are capped at $100,000 for each employee. There is a cap applied at $10 million.


How much of the Loan can be Forgiven?

You will be obligated to owe money if your loan is used for anything outside of payroll costs, rent, mortgage interest, and utilities payments over the 8 weeks after receiving the loan. As a result of high subscriptions, it is anticipated that not more than 25% of the forgiven amount can be applied towards non-payroll costs. You will also be obligated to owe money if you do not maintain your staff and payroll; this loan creates an incentive for you to retain your employees. Your loan forgiveness amount will be reduced if:

  • You decrease your full-time employee headcount
  • You decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.

You have until June 30, 2020 to restore full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.


What is the interest rate?

1.0% fixed rate


When do I have to Start Paying Interest on the Loan?

All payments are deferred for 6 months; however interest will continue to accrue.


When is the Loan Due?

In 2 years.


Can I Pay Off the Loan before 2 Years?

Yes, without prepayment penalties or fees.


Is Collateral Required?

No, collateral is not required.


Is there a Requirement to Personally Guarantee the Loan?

There is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue charges against you.


What are the Certification Requirements?
  • The loan is necessary to maintain ongoing operations due to current economic uncertainty.
  • The funds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.
  • You have not received another loan under this program.
  • Documentation that verifies the number of full-time equivalent employees on payroll including dollar amounts for payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the 8 weeks after receiving the loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities.
  • All the information in your application and supporting documents is true and accurate.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted.
  • You affirm that tax documents are identical to those submitted to the IRS.
  • You agree that the lender can share 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.


How to Apply for a Small Business Loan through the PPP?
  • First, you must find a Small Business Association (SBA)-approved lender and work through this lender.      List of Active 7(a) Lenders
  • Applications provided HERE can be submitted to one of the lenders above.


One should note that not all 7(a) lenders are required to participate in this program so you should inquire with them to see if they are. Loans are also being made through federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions. Other regulated lenders will be available once they’re approved and enrolled in the program. The SBA does not directly lend money to small businesses; it guarantees the loan by acting as a co-signer.


When do I Apply for the Loan?
  • Starting on April 3, 2020, small businesses and sole proprietorships can apply to receive loans to cover payroll and other certain expenses.
  • Starting on April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses.


Applying for Loan Forgiveness

To obtain loan forgiveness through the PPP, you will need to provide verification to your lender for the number of full-time equivalent employees and pay rates, payments on eligible mortgage, lease, and utility obligations. You must certify that these documents are true and that you used the forgiveness amount to retain employees and made eligible mortgage interest, rent, and utility payments. The lender must make a decision on forgiveness within 60 days.


Guidance for Employers on Rehiring

Will my loan forgiveness amount be reduced if I initially laid off an employee, then offered to rehire, but the employee declined the offer?

  • No. The SBA and Treasury provided an interim final rule that specifies, to qualify for this exception, the borrower must have made a good faith, written offer of rehire, and the employee’s rejection of that offer must be documented by the borrower.


Guidance for Employees on Rehiring

Will I lose unemployment compensation if I reject an employment offer from my previous employer?

  • In guidance from the Treasury, employees who reject offers of re-employment may forfeit eligibility for continued unemployment compensation.


Important Things to Note About the PPP:
  • Loans will be made by lenders who are participants in the SBA’s Section 7(a) program and those lenders will also decide whether to accept a borrower’s application for forgiveness.
  • Detailed accounting and complete recordkeeping will be vital to taking advantage of these provisions.
  • The loan period for this program began on February 15, 2020 and will end on December 31, 2020.
  • If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan.
  • Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.