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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 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 during the 8 week period after the loan is originated and you maintain pre-crisis employment levels.   Loan payments may be deferred for 6 months.
 
PPP Loan Forgiveness Guidance from SBA: 
 

The SBA just issued much-awaited 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.  More guidance from the SBA is still pending and this document is subject to change.  It can be found HERE.

 

Under the new procedures, a borrower must 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.  

 

Borrowers are required to submit items (1) and (2) to their lender.

 

More Details found HERE.  Again, guidance from the SBA is still pending and this document is subject to change.

 

WHEN TO APPLY:

We encourage you to apply as quickly as you can because there is a funding cap. 

Please know that this is an “all hands on-deck” situation for all of us at Midwest BankCentre, and everyone is doing the best they can to process everyone’s application as quickly as possible. That said, we cannot guarantee that your application will be processed before the money runs out and we cannot guarantee that the SBA will approve your request. We will do our very best for you. Feel free to contact us at any time for help with your PPP Loan Program application.

 

HOW TO APPLY FOR A PPP LOAN THROUGH MIDWEST BANKCENTRE:

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 to download.

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

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

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.

 

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.

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.


When can I apply?

  • Starting April 3, 2020, small businesses and sole proprietorships can apply
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply

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 June 30, 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.