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The deadline to apply for a Paycheck Protection Program loan has passed.  We are no longer accepting applications.

 
What Does the Paycheck Protection Program in the new CARES Stimulus Bill Mean for Your Small Business?

 

Round 2 of The Paycheck Protection Program (“PPP”) authorizes up to $310 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. The Paycheck Protection Program Flexibility Act was signed into law on Friday June 7, 2020. The Act extended the covered period for loan forgiveness from 8 weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement.  Borrowers who have already received PPP loans retain the option to use an eight-week covered period.

 
The loans are federally-guaranteed, through the SBA and the Treasury and all loan terms will be the same for everyone. 
 
The loan may be FORGIVABLE! What does that mean?  It means that it acts more like a GRANT when spent on covered expenses you maintain pre-crisis employment and salary levels, or re-hire quickly. Loan payments have the potential to be deferred up to 10 months after the end of the borrower’s loan forgiveness covered period.
 
PPP Loan Forgiveness Guidance from SBA: 
 
 

The SBA has issued guidance allowing borrowers to claim forgiveness of their Paycheck Protection Program (PPP) loans.  The SBA’s Loan Forgiveness Application provides detailed instructions for borrowers and the calculation of the PPP loan forgiveness. 

Current guidance can be found HERE. This guidance is subject to change based on future SBA guidance. 

 

Under the current guidance, a borrower may request the forgiveness of PPP loan proceeds by filing SBA Form 3508, Paycheck Protection Program Loan Forgiveness Application.  The application has four components:

(1) the PPP Loan Forgiveness Calculation Form;

(2) PPP Schedule A;

(3) the PPP Schedule A Worksheet; and

(4) an (optional) PPP Borrower Demographic Information Form.  

 

On June 16, 2020, the Small Business Administration (SBA), in consultation with the U.S. Treasury Department, released the Paycheck Protection Program (PPP) EZ Loan Forgiveness Application. The criteria for utilizing the EZ form are disclosed below (*). Although both the original (SBA Form 3508) and EZ loan forgiveness applications are available to borrowers, we anticipate additional guidance on the forgiveness process to be released in the coming weeks. At this time, we recommend discussing your forgiveness options with a financial adviser to gain insight into which avenue is best for your current situation.

 

More Details found HERE.  This guidance is subject to change based on future SBA guidance.

 

Want to learn more?

The entire Midwest BankCentre team, including our Small Business Administration specialist, is ready to provide game-changing assistance for small business owners.

Please call us at (314) 631-5500, or (800) 894-1350 if you have any questions. 

When we DREAM BIG, we all RISE TOGETHER.

 

* According to the PPP Loan Forgiveness Application Form 3508EZ instructions, a borrower may use the streamlined form if it meets one of three criteria: (i) the borrower is self-employed, an independent contractor, or sole proprietor with no employees at the time of application; (ii) the borrower did not reduce salary or wages of any employee by more than 25 percent during the covered period and did not reduce the number of employees or the average paid hours of employees; or (iii) did not reduce salary or wages of any employee by more than 25 percent during the covered period and was unable to operate during the covered period at the same business activity level as prior to February 15, 2020, due to compliance with certain government requirements.

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, up to $10 million.

If you are a seasonal or new business, you will use different applicable time periods for your calculation.


Who’s Eligible for the Loan?

All Businesses – including nonprofits, veterans organizations,  Self Employed, Sole Proprietorships and Independent Contractors - with less than 500 employees are eligible for the loan.  This includes full-time and part-time employees, with special waivers for groups in the accommodation and food services industry and franchises.


How can I apply?

Your application will NOT be considered complete and will NOT be processed with missing documentation.

1.) Download and fill out the borrower application form (SBA Form 2483 (04/20). Click here.

2.) Gather the appropriate supporting documentation.  See documentation checklist. Click here.

3.) Determine the Maximum Loan amount by downloading and completing the Max. Loan Amount Calculator. Click here. 

4.) Submit Your Application.

We are processing loan applications for clients on a first come first serve basis. It is imperative that all information be accurate and complete upon submission.  Your application will not be considered complete and cannot be processed with missing documentation. Incomplete applications will go to the end of the queue once all required documentation has been provided.


What other documents will I need to include in my application?

Please see the documentation check list HERE.


How long will this program last?

Although the program is open until August 8th, 2020, we encourage you to apply as quickly as you can because there is a funding cap and lenders need time to process your loan.

What Expenses Are Eligible and considered part of the Monthly Operating Costs?

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

What’s Included in Payroll Costs?  What’s Excluded? 

Included:

  • Employee Salary, wages, benefits and commissions, including tips
  • 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

Excluded:

  • Payroll costs exclude compensation of an individual person in excess of $100,000, compensation to those whose principal residence is outside the US, and certain qualified sick and family leaves.

What are the Key Stipulations for Loan Forgiveness?

The loan amounts will be forgiven as long as:

  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
  • Employee and compensation levels are maintained.

*It is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.


For Loan Forgiveness, how are employee and compensation levels defined?

              In order to be eligible for loan forgiveness, employee and compensation levels must be maintained.

  • 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.

Subject to ongoing guidance from the SBA

 

What are the Loan Terms?

All loan terms will be the same for everyone.


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.