Under the CARES Act, signed into law by President Trump on March 27, 2020, the Paycheck Protection Program authorizes $349 billion in forgivable loans for small businesses of 500 or fewer employees.  The loan is forgiven as long as it is used to cover payroll costs, mortgage interest, rent, and utility costs over the eight-week period following the loan’s distribution to the business.  In order to take full advantage of the loan forgiveness, employee retention and compensation levels must remain the same.  Please see our previous post going into the specifics about loan forgiveness HERE.

When can you apply?

  • April 3, 2020 for small businesses and sole proprietorships.
  • April 10, 2020 for independent contractors and the self-employed.

Where do you apply?

  • Any existing SBA Lender;
  • Any federally insured depository institution, federally insured credit unit, or Farm Credit System institution that is participating; or 
  • Any other federally regulated lender once approved by the SBA.

What do you need to have before you apply?

  • You need to fill out the Paycheck Protection Program loan application, which can be found HERE; and
  • Payroll documentation which showed how you determined the average monthly Payroll Cost necessary to receive the loan.

What are 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; 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 big can the loan be and how many loans can you get?

  • You are only authorized to apply for one loan.
  • The loan can be up to 2.5 times your average monthly payroll costs from the previous year or $10 million, whichever is lesser.

What documents will you need to have your loan forgiven?

  • You will submit a request to the lender who processed your loan.  The lender must make a decision within 60 days.
  • You need to have all supporting documentation required by the application.  This documentation includes:
    • Verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight-week period following the loan.