Paycheck Protection Program Breakdown

Paycheck Protection Program (PPP) Breakdown

Update as of April 27, 2020

The federal U.S. Small Business Association (SBA) resumed accepting Paycheck Protection Program (PPP) applications from participating lenders on Monday, April 27, 2020, at 10:30 a.m. today.

• The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
• SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities.
• You can apply through any existing SBA 7(a) lender or through any federally insured bank or credit union that is participating.
• You should consult with your local lender as to whether it is participating in the program.

For questions, please contact your local lender or SBA's Customer Service Center at (800) 659-2955.

Update as of April 16, 2020

NEW CARES ACT GUIDANCE

The Federal Reserve and Treasury have released new guidance earlier this week that answers some of the questions and recommendations U.S. Travel outlined previously. Despite the guidance, U.S. Travel is still concerned that too much of the travel industry is being left out. The updated guidance includes:

• Paycheck Protection Program (PPP): Treasury provided clarification on business affiliation for PPP applicants as well as guidance on how borrowers should calculate their payroll costs and the number of employees. More info can be found here and on this updated U.S. Travel fact sheet. However, the SBA announced this morning the program is no longer accepting any more applications.

U.S. Travel continues to update its very detailed and helpful CARES Act resources toolkit.

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The Paycheck Protection Program (PPP) from the federally funded U.S. Small Business Administration (SBA) helps businesses keep their workforce employed during the COVID-19 pandemic. It is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. You can find the details here.

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent and utilities (at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

The covered period during which expenses can be forgiven extends from February 15, 2020, to June 30, 2020. Borrowers can choose which 8 weeks they want to count toward the covered period, which can start as early as February 15.

This loan has a maturity of 2 years and an interest rate of 0.5%.

Borrowers can calculate their payroll costs, as well as their number of employees, using data from either the previous 12 months of payroll or calendar year 2019. Seasonal businesses can use data from February 15 – May 9, 2019, or March 1 – June 30, 2019, and new businesses can use data from January 1 – February 29, 2020.

Helpful Links

• FRLA Paycheck Protection Program loan estimation tool
• PPP Borrower Application Form
• Treasury Department PPP FAQs

Where can you apply?

• You can apply through your local bank or credit union. Any federally insured bank, credit union or existing SBA 7(a) lender that is participating in the Paycheck Protection Program can accept your application.
• You should check online, call or email your preferred lender to ensure the organization is participating in the PPP program.
• Lenders may have individual application processes.
• Lenders may begin processing loan applications as soon as today.

Who can apply?

• This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organizations or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.
• Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.
• Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs fewer than 500 workers. This means each store/location could be eligible.

When can I apply?

• Starting today, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• Starting April 10, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Sample application:

• If you wish to begin preparing your application, you can download a sample form to see the information that will be requested from your local lender.

Questions? Please contact the SBA's Customer Service Center at (800) 659-2955 or your local lender.