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UPDATE: APPLICATIONS ACCEPTED THROUGH FRIDAY, MAY 15, 2020

 

The Paycheck Protection Program (“PPP”) provides loans as a direct incentive for small businesses to keep their workers on the payroll during the Coronavirus (COVID-19) crisis. The 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.

Application Processing Timing

The application process for the the Paycheck Protection Program opens Friday, April 3, 2020, for small businesses, nonprofits, and sole proprietorships. Starting, Friday, April 10, 2020, independent contractors and self-employed individuals can apply. It will continue until June 30, 2020, or until all PPP funds are exhausted—whichever comes first.

Documents from the SBA

 

UPDATE: APPLICATIONS ACCEPTED THROUGH FRIDAY, MAY 15, 2020

 
Please contact your BankFirst banker or BankFirst commercial lender to learn more about the PPP program or to apply. Documents that will help you complete the application form include:
  • 2019 payroll - including the last 12 months of payroll
  • 2019 employees - 1099s for 2019 employees and independent contractors that would otherwise be an employee of your business (NOTE: Do not include 1099s for services)
  • Healthcare costs - all health insurance premiums paid by the business owner under a group health plan
  • Retirement - your company retirement plan funding paid for by the company

In order to expedite the application process, it is highly recommend that your accountant, tax professional, or attorney complete or assist you in completing the application.

 
Visit this page to read more about the SBA Paycheck Protection Program.
 

Get Started

Please contact your BankFirst banker or BankFirst commercial lender should you have any questions, and check back here for updates to our website as more information becomes available.
 

The SBA is currently working to provide further clarification, as this is a fluid situation. Once the SBA makes the PPP loan application (and any required forms or documents) available, it will be posted on this page.   

 

UPDATE: APPLICATIONS ACCEPTED THROUGH FRIDAY, MAY 15, 2020

When can I apply?

  • 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.

Where can I apply? You can apply through any existing SBA lender.

Who can apply? All businesses – including nonprofits, veterans organizations, tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries (click HERE for additional detail).

For this program, the SBA’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the SBA’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the SBA. Additional guidance may be released as appropriate.

What do I need to apply? You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to a BankFirst lender that is available to process your application by June 30, 2020. Click HERE for the application. 

What other documents will I need to include in my application? You will need to provide your lender with:

  • Completed PPP Application (SBA Form 2483)
  • Copies of all owners' driver's licenses
  • Payroll expense verification documentation including:
    • IRS Form 940 (2019)
    • IRS Form 941 (2019; all four quarters required)
    • W-3 (2019)
    • Payroll Summary Report with a corresponding bank statement
      • If a Payroll Summary Report is not available, employee pay stubs as of February 15, 2020 (or corresponding period) with a corresponding bank statement
      • Breakdown of payroll benefits (vaction, allowance for dismissal, group healthcare benefits, retirement benefits, etc.)
      • 1099s for compensation paid to independent contractors and contract labor (2019)
      • Written and Signed Certification that all employees live within the United States. If any do not, a detailed list with correspoding salaries of all employees outside the United States.

Do I need to first look for other funds before applying to this program? No. We are waiving the usual SBA requirement that you try to obtain some or all of the loan funds from other sources (i.e., we are waiving the Credit Elsewhere requirement). 

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. 

How many loans can I take out under this program? Only one.

What can I use these loans for? You should use the proceeds from these loans on your:

  • 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 counts as payroll costs? Payroll costs include:

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee);
  • 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
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

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. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.

How do I calculate the maximum amount I can borrow? The following methodology, which is one of the methodologies contained in the Act, will be most useful for many applicants:

  • Step 1: Aggregate payroll costs (defined in detail below in the next question) from the last twelve months for employees whose principal place of residence is the United States.
  • Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
  • Step 3: Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
  • Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5.
  • Step 5: Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).

The examples below illustrate this methodology:

    • Example 1 – No employees make more than $100,000
      • Annual payroll: $120,000
      • Average monthly payroll: $10,000
      • Multiply by 2.5 = $25,000
      • Maximum loan amount is $25,000
    • Example 2 – Some employees make more than $100,000
      • Annual payroll: $1,500,000
      • Subtract compensation amounts in excess of an annual salary of
      • $100,000: $1,200,000
      • Average monthly qualifying payroll: $100,000
      • Multiply by 2.5 = $250,000
      • Maximim loan amount is $250,000
    • Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000.
      • Annual payroll: $120,000
      • Average monthly payroll: $10,000
      • Multiply by 2.5 = $25,000
      • Add EIDL loan of $10,000 = $35,000
      • Maximum loan amount is $35,000
    • Example 4 – Some employees make more than $100,000, outstanding EIDL loan of $10,000
      • Annual payroll: $1,500,000
      • Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
      • Average monthly qualifying payroll: $100,000
      • Multiply by 2.5 = $250,000
      • Add EIDL loan of $10,000 = $260,000
      • Maximum loan amount is $260,000

What qualifies as “payroll costs?” Payroll costs consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions, or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement; payment of state and local taxes assessed on compensation of employees; and for an independent contractor or sole proprietor, wage, commissions, income, or net earnings from self-employment or similar compensation.

Is there anything that is expressly excluded from the definition of payroll costs? Yes. The Act expressly excludes the following:

  • Any compensation of an employee whose principal place of residence is outside of the United States;
  • The compensation of an individual employee in excess of an annual salary of $100,000, prorated as necessary;
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees; and
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act (Public Law 116–127).

Do independent contractors count as employees for purposes of PPP loan calculations? No. Independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.

How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

You will also owe money if you do not maintain your staff and payroll.

  • 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.

How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

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. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

What do I need to certify? As part of your application, you need to certify in good faith that:

  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
  • You have not and will not receive another loan under this program.
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews. 

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