Unpacking the Paycheck Protection Program (PPP)

100% forgiveness qualifications are: 

• Maintain Full-Time Equivalent (FTE) headcount for following 8 weeks (as compared to benchmark time windows of either a) 1/1/20 - 2/29/20 or b) 2/15/19 - 6/30/19) ~ *If FTE drops, forgiveness % is reduced accordingly (see "How Much" below)
• Sustain wages for <$100k/yr employees at levels of at least 75% 
• Restore employees and/or wages that were reduced between 2/15/20 - 4/26/20

Use loan funds as outlined (documentation required): 

• At least 75% on eligible payroll and related costs ~ *If payroll totals for employees under $100k decrease by more than 25%, forgiveness % is reduced accordingly (see "How Much" below)
• No more than 25% on mortgage/rent, utilities, or interest-only debit obligations originating prior to 2/15/20

Eligibility generously includes:

• All small businesses under 500 employees, non-profits, veteran organizations, tribal business concerns, sole proprietors…
• AND independent contractors, and self-employed individuals
• As long as your entity started prior to 2/15/2020

Must certify in good faith that current economic uncertainty makes the loan necessary to support ongoing operations, such as sustain workers, payroll, mortgage/rent, and utility payments

While owners with ownership in other business will have to be detailed in an Addendum, it’s still unclear how that will impact eligibility across entities depending on unique circumstances 

Maximum loan of 2.5 x average monthly eligible payroll and related costs, up to $10M

• Again, up to 100% forgivable if qualifications are adhered to (see "*Fully Forgiven Loan" above)
• Eligible ‘payroll’ is capped at $100k/employee

Terms are 2 years @ 1.0% with no payments for 6 months (interest accrues) and no pre-payment penalties

No personal guarantee or collateral required, and a credit check is not required

Program is open until 6/20/2020, or until funds are exhausted, and applications are scheduled to begin:

• 4/3/2020 for small businesses, sole proprietors, and non-profits
• 4/10/2020 for independent contractors and self-employed individuals 

Loans are originated and serviced through SBA-approved lenders, so we advise reaching out to your bank quickly to ensure they can access this program

• The SBA and Treasury released an Interim Final Rule to lenders late-evening on 4/2/2020, hours before the go-live date, so hopefully banks will quickly implement the new regulations and activate their online application process
• Due to high demand, most banks are currently limiting applications to existing customers

Thankfully, on 4/13/2020, the SBA approved some well known non-banks that many folks are already doing business with:

• Intuit/Quickbooks ~ https://quickbooks.intuit.com/small-business/coronavirus/paycheck-protection-program/
• Square ~ https://squareup.com/us/en/l/sba-ppp-loans
• PayPal ~ https://www.loanbuilder.com/ppp-loan-application

While lenders will set their own list of supporting documents, here are suggested items to gather: 

• List of authorized loan signer(s) for entity
• Entity formation and filing documents, operating agreement, and state certificate of good standing
• 2019 and YTD 2020 payroll details, including Forms 940 and 941
• Employer-paid State payroll tax (not federal; not employee withholdings)
• W-2s and/or 1099s
• 2019-current group health insurance premium and retirement funding statements
• 2019-current tax returns and/or complete financials (profit/loss and balance sheet) 

Additional information:

• SBA’s Paycheck Protection Program ~ https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp 
• US Dept of Treasury Small Business Assistance ~ https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
• US Chamber Guide and Checklist ~ https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf 
• SBA’s List of Eligible Lenders ~ https://www.sba.gov/paycheckprotection/find