PPP FAQs from "Preparing for Loan Forgiveness" webinar
New to the PPP? Welcome!
• IF YOU HAVE NOT YET BEEN ASSIGNED TO A BUSINESS BANKER...
Please email SBAInquiry@BlackhawkBank.com to get the application process started. If you know it, please include either your NAICS code (look up here) or tell us what your industry your business is in (ex- manufacturing, construction, retail, etc.).
• CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (CARES) ACT
While the program continues to evolve, changes and clarifications are being actively monitored. The CARES Act allocated just under $350 billion in stimulus help to keep small business workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides federally guaranteed loans to qualifying small businesses.
• WHAT BUSINESSES ARE ELIGIBLE? *details are subject to change*
Borrowers are broadly eligible if they have 500 or fewer employees, or are certain businesses that meet SBA size standards. Additionally, 501(c)(3) nonprofits, 501(c)(19) veterans organizations, and certain tribal concerns qualify for PPP loans. Borrowers may also be sole proprietors, independent contractors, or self-employed.
Borrowers must have been in operation on February 15, 2020, and employed either salaried employees subject to payroll taxes or paid independent contractors. Further, borrowers must certify they meet the criteria above, were impacted by current economic uncertainty, and they will use the funds for allowable uses defined in ‘Loan Terms’ below.
Borrowers must also provide the relevant documentation as part of this certification. Finally, borrowers must certify the information they provide is accurate.
• LOAN TERMS
These first-come, first-served loans are offered until June 30, 2020, or until the program runs out of funds. Loans are capped at the lesser of 250% of a borrower’s average monthly payroll costs, or $10 million. Payroll costs include, but are not limited to, salary, paid leave, medical, and healthcare. Further, salary for employees making more than $100,000 is capped at that level for the calculation of loan size. All loans have a 1% interest rate and a two-year term. Loans are 100% guaranteed by the SBA. Borrowers do not have to make any payments for six months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this six-month deferment.
PPP loans may be used to pay for payroll costs, mortgage interest obligations, rent obligations, utilities, and any other interest payment on debt obligations accrued before February 15, 2020. SBA requires 75% of the loan to be used for payroll costs, while the remaining 25% can be used for the other expenses. Funds used for purposes other than those outlined above must be repaid by the borrower.
• WHAT IS THE MAXIMUM PPP LOAN AMOUNT?
The maxiumum PPP loan amount is $10 million. The maximum loan amount that will be extended to a borrower is $10 million, or an amount determined by a payroll-based formula - whichever amount is less.
• HOW TO CALCULATE MAXIMUM LOAN AMOUNTS - BY BUSINESS TYPE?