Frequently Asked
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Loan Eligibility, Terms, Usage, and Forgiveness

Loans are available to small- and medium-sized businesses with fewer than 500 employees (subject to limited exceptions), including 501(c)(3) nonprofit organizations, 501(c)(19)veteransorganizations and/or Tribal businesses. Businesses with more than 500 employees may still qualify for the program by meeting the SBA’s definition of a “small business concern.” A business may also qualify if it meets the SBA employee-based or revenue-based size standard corresponding to its primary industry. Details on SBA size standards can be found here.
Loan proceeds may only be used for specific expenses, such as payroll costs, utilities, mortgage interest, rent/lease payments, group healthcare benefits, intereston existing debt, and other approved efforts to retain employees

Maximum loan size is up to 2.5 times average monthly payroll costs over the prior 12 months for most businesses, or over a more targeted period for seasonal businesses, but may not exceed $10 million.

For most businesses, average monthly payroll costs will be based on the full 2019 calendar year or another consecutive period of twelve months ending in January, February, or March 2020. Your monthly payroll includes wages, tips, group health, retirement benefits and employer-paid taxes, but excludes the amount of compensation to individuals in excess of $100,000 and compensation paid to independent contractors.

Seasonal businesses may use average monthly payroll costs for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. Recently established businesses may use average monthly payroll costs for the period from January 1, 2020 through February 29, 2020 if they were not in operation for a full twelve months.

We’ve created a loan calculation worksheet which can be found here. [link to worksheet] This worksheet also details those elements which must be excluded from payroll calculations.
The exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:
  • Employer contributions to defined-benefit or defined-contribution retirement plans
  • Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums
  • Payment of state and local taxes assessed on compensation of employees.
Under the Act, payroll costs are calculated on a gross basis without regard to (i.e., not including subtractions or additions based on) federal taxes imposed or withheld, such as the employee’s and employer’s share of Federal Insurance Contributions Act (FICA) and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employer’s share of payroll tax. For example, an employee who earned $4,000 per month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.
Paycheck Protection Program loans do not require a personal guarantee.
Paycheck Protection Program loans do not require collateral.

All or a portion of the loan and accrued interest may be forgiven.

The amount of forgiveness is calculated as the sum of amounts paid in the eight weeks following loan origination for payroll, mortgage interest, rent, and utilities. The portion of forgiveness that can come from non-payroll expenses is limited to 25% of the total forgiven amount.

Borrowers will not be charged any participation fees or pre-payment fees.
Balances remaining after loan forgiveness will have a maximum maturity of 2 years.
Loan and interest payments are deferred for 6 months. However, interest will continue to accrue over this period. All or a portion of the loan and accrued interest may be forgiven, so you may not need to pay any of the loan back. Any amount that is not forgiven will be treated as a two-year loan with a 1% fixed interest rate.
The interest rate for Paycheck Protection Program is set by the SBA and is 1.00%.
Impacted businesses may only receive one Paycheck Protection Program loan. This means that if you apply for a PPP loan you should consider applying for the maximum amount that you are eligible to receive.
There may be more applicants and requests for loans than available funds from the SBA. If that occurs, not every qualified applicant will receive loan proceeds under the Paycheck Protection Program.
The PPP loan will NOT affect your future SBA loan funding or total dollars allowed from the SBA.
The Paycheck Protection Program was signed into law in the wake of the COVID-19 global health crisis. One of this program’s significant features is that you can apply for loan forgiveness after receiving the funds. Forgiveness can be up to 100% of the loan and accrued interest. Another unique feature is the loan deferment, meaning you won’t have to pay principal and interest on your loan for the first 6 months.
No, the SBA is waiving the requirement that you try to obtain funds from other sources (i.e., Credit Elsewhere requirement).
  • Borrowers cannot apply for both an Economic Injury Disaster Loan (EIDL) and a PPP loan
  • Note, if a borrower received an EIDL between January 31, 2020 and April 3, 2020 it does NOT impact their ability to apply for a PPP loan.
  • If an EIDL loan received between January 31, 2020 and April 3, 2020 was used for payroll costs, your PPP loan must be used to refinance your EIDL loan (and the amount of the PPP loan is increased by the outstanding EIDL, subject to the $10mm cap).It’s critical for you to weigh all options available to you to ensure the best financial decision for your business. To apply for an EIDL, you must apply directly through the Small Business Administration.
Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.

Application Process and Workflow

The program is administered by SBA lenders and loans may be originated through June 30, 2020 contingent upon the availability of the program funds.
Based on current guidance, you should gather the following documents to apply for a Paycheck Protection Program loan:
  • For contractors or self-employed:
    • Schedule C of 2019 1040 form (a 2018 form will not be accepted)
    • 1099-MISC
    • Invoice / Bank Statements / Book of record for fiscal year 2019
    • Invoice / Bank Statements / Book of record for through Feb 15, 2020
    • Form 941 (for persons and entities with 1099 employees)
  • For any other type of entity:
    • TIN document
    • Voided check
    • Business existence confirmation
    • Payroll processor records
    • Payroll tax filings
    • EIDL documentation (if applicable)
Some options include:
  • Utility bill, not more than two months old, issued to the applicant
  • Cancelled check (not more than two months old) with both name and address imprinted
  • Deed, mortgage, monthly mortgage statement, or residential rental/lease agreement
  • U.S. Postal Service change of address confirmation form or postmarked U.S. mail with forwarding address label (must display the applicant’s full name)
  • Receipt for personal property taxes or real estate taxes paid within the last year
  • Current automobile or life insurance bill (cards or policies are not accepted)
  • Original monthly bank statement not more than two months old issued by a bank
No, there is no cost to applying for the loan.
You may apply with multiple lenders, however only one loan may be originated per entity applying.

Processing Timelines

Timing is dependent on your accurate completion and submission of information to us and volume of requests. Once we approves your loan, the SBA registers it and an executed promissory note is delivered to the bank, funds can be disbursed as fast as possible by wire transfer or ACH payments directly into your business deposit account.