$349 Billion Paycheck Protection Program Opens Today

April 3, 2020

Relief is on the way to many small businesses with the $349 billion Paycheck Protection Program which opens today.  The PPP offers federally backed loans of up to $10 million to employers with fewer than 500 employees (and some larger employers depending on SBA size standards).  This program is for any small business including sole proprietorships, independent contractors and self-employed persons,  private  non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19.

The Paycheck Protection program provides funding for up to eight weeks of payroll, mortgage and rent payments as well as utilities to businesses that keep workers on during the crisis. It also can apply to companies that rehire recently laid-off workers. Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels both during and after the pandemic. Loan forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease. The loan forgiveness is tax-free.

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, 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.

First, is my business eligible if I have over 500 employees?  Yes, possibly.
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 if their individual locations employ less than 500 workers.

Depending on your industry, a small business can be a business with a maximum of 250 employees or a maxium of 1,500 employees.  This includes sole proprietorships, LLC’s, corporation and non-profits.  For those unsure if they meet industry guidelines, they can check our website (EDAscc.com) or the SBA.gov website.  https://www.sba.gov/document/support--table-size-standards

Need capital to cover the cost of retaining employees? Then this program may be right for you:

Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP) is a forgivable loan to small businesses to pay their employees during the COVID-10 crisis.  Payroll costs are capped at $100,000 on an annualized basis for each employee, a portion of no more than 25% of the forgiven amount can be used to cover rent, utility costs and most mortgage interest over the 8 week period after the loan is made.  Employee and compensation levels must be maintained.   

Program highlights:

• All loan terms will be the same for everyone.
• 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.

• Payroll costs are capped at $100,000 on an annualized basis for each employee.
• Loan payments will be deferred for 6 months.
• Starting April 3, 2020, 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, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• All businesses, including nonprofits, with 500 or fewer employees can apply for this program. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
• You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender by June 30, 2020.
• The SBA requirement that you try to obtain loan funding for other sources first is waived for PPP.
• You can only take out one (1) loan under this program.
• Loans can be used for:
  • Payroll costs, including benefits;
  • Interest in mortgage obligation, 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.

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.

St. Clair County SBA lenders
Chase Bank  (servicing existing customers at this time)
Chemical Bank  (SBA preferred lender)
Eastern Michigan Bank  (SBA preferred lender)
Fifth Third Bank (SBA preferred lender)
Lakestone Bank and Trust ( servicing existing customers at this time)

*More financial institutions will be added as they reply  to our request about SBA lending offered at their institution.  Please reach out to your lender directly to see if they are a participating lender. 

Lenders may begin processing loan applications as soon as today,  April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020.

SBA Paycheck Protection Program Link

If you wish to begin preparing your application, you can download a copy of the PPP borrower application form to see the information that will be requested from you when you apply with a lender.