There is a new emergency loan program that will provide cash-flow assistance to those small businesses impacted by the current COVID-19 quarantine situation.  The Paycheck Protection Program, commonly referred to as the PPP, is a program that is structured to fit similar criteria of an SBA loan and is available to businesses that meet the definition of a small business.  SBA 7(a) banks that are currently FDIC approved as PPP lenders will be providing these loans.


Most SBA Lenders will be making these loans - check with your banks and lenders

• No lender fees
• Available until June 30th, 2020
• Eligible if less than 500 employees
• Can operate as a sole proprietor with no employees
• Business had to be in operation on February 15th, 2020
• Eligible recipients may qualify for a loan up to $10 million based on an 8-week prior       average payroll plus an additional 2% of that amount.


PPP Loan proceeds can be used for;
• Payroll Costs
• Group Healthcare
• Rent and/or Mortgage interest
• Utilities – includes phone and internet


These expenses listed above need to be paid during the first eight weeks after the loan is made.  There is a loan forgiveness calculation once you go back through and reconcile these costs during that covered 8-week period.



The lender needs an average amount per monthly payroll.  The loan amount is 2.5 times that monthly cost. 
• Gross wages capped at $100k per employee (tips, severance, dismissal, paid time off)
• State and local employer taxes
• Group health care
• Retirement benefits
Lenders are requiring you submit  payroll documentation to support the figure for the loan you are requesting;
• 2019 941's for all quarters filed
• Payroll reports with detail of employees paid during 12 months
• Documentation to support health and retirement costs
• Any other documentation to support the figures




You must apply through your lender for forgiveness.  Forgiven amounts will not be considered cancellation of debt for federal income taxes and you would not have to pay income taxes on it.


When applying for forgiveness you will need to supply;
• IRS and state payroll tax filings
• Documentation verifying the number of employees on payroll and their rates
• Certification that the documentation provided is true and in accordance with the rules from the lender


Any amount not forgiven will bear interest at a maximum rate of 1 percent and needs to be paid back in full by 2 years.  Initial payments on these loans will be deferred between 6 to 12 months.   The lender will give guidance on the deferral period and has all waived prepayment penalties.


Interested in seeing the loan application for a PPP loan, please go to the following link: