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The newly enacted CARES Act includes a $349 billion business loan program called the Paycheck Protection Program to offer relief measures to small businesses, primarily to keep employees on payroll and cover other critical expenses.
While federal regulations with specific execution instructions must be issued before loans can be made under the Program, we do know certain details about its provisions that we are sharing here.
The Small Business Administration (SBA), the federal agency that administers the Program, still has issued final guidance and has begun to accept applications. If you plan to submit an application, you can prepare for the application process by reading the Program elements below and gathering the appropriate documents to support your application.
Important elements of the Program:
As we work together to face these unprecedented challenges, please remember, we are here to help you apply for this funding or however we can.
1. Start and complete your Initial Loan Packet through our Contact Us link and Sign Now link.
2. After we take your application, our team will request and review your documents using proprietary scoring metrics.
3. Once pre-screened and loan amount determination, we will present your SBA app and collect any supporting documents to a SBA lender of your choice or one of our approved SBA Partners.
4. Once accepted, we’ll manage the loan process for you and conduct communication between you and the SBA lender until your funds are issued.
We will update the information here for you once that information is available regarding programs under the CARES Act, including the Paycheck Protection Program.
In the meantime, gathering the following information and documentation now will better prepare you for submitting an application for this or other programs currently available or programs that may become available at a later date.
Given the fact that these loans will be funded through SBA Lenders, and many of those lenders have credit policies that differ, we are asking you to gather as much information as you can so that any delays will be prevented
We will assist you in submitting the application so we will be able to hold this information for you once we are ready to submit your application.
Contact Us and we can get this all done electronically!
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You cannot receive both Unemployment Benefits and a PPP loan at the same time. You should consider the payout of each program to determine which is the best fit for you.
Business owners may not count independent contractors toward their payroll when calculating the size of their PPP loans.
Yes you may. The CARES Act states: “…individuals who operate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eligible. Applicants who fall in this category will need to provide documentation such as “payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and income and expenses from the sole proprietorship, as determined by the (SBA) Administrator and the (Treasury) Secretary.”
0.50% fixed rate.
All payments are deferred for 6 months; however, interest will continue to accrue over this period.
The loan is due in 2 years and you can pay off the loan earlier than 2 years with no prepayment penalties or fees.
For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).
Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):
Payroll costs plus any payment of interest on any covered mortgage obligation (not including any prepayment or payment of principal on a covered mortgage obligation) plus any payment on any covered rent obligation plus and any covered utility payment.
Funds are provided in the form of loans that will be fully forgiven when 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.
Must Keep Employees on the Payroll—or Rehire Quickly
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.
You must apply through your lender for forgiveness on your loan. In this application, you must include:
Any loan amounts not forgiven are carried forward as an ongoing loan with max terms of 10 years, at a maximum interest rate of 4%. Principal and interest will continue to be deferred, for a total of 6 months to a year after disbursement of the loan. The clock does not start again.
No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity.
Yes. As of April 3rd, the SBA released the Paycheck Protection Program interim final rule. Based on the analysis of the IFR, it has been confirmed that the IFR removes the industry-specific revenue thresholds. Agriculture enterprises that employ 500 or less people whose principal place of residence is in the United States are eligible, regardless of revenue levels.
Your monthly average payroll expense will be your annual net profit divided by 12. If your annual net profit is over $100,000, you may only claim up to $100,000 divided by 12.
We at ACS Executives will package the loan request for you and submit to your current and other SBA 7(a) lenders are eligible for PPP.
The Department of Treasury will also be in charge of authorizing new lenders, including nonbank lenders, to help meet the needs of small business owners.
Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs).
However, you cannot use your PPP loan for the same purpose as your other SBA loan(s).
For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll not during that period or for different workers.
Emergency Economic Injury Grant and Economic Injury Disaster Loan (EIDL) recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan as long as there is no duplication in the uses of funds.
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). .
Only one.
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.
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.
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.
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.
No. No collateral is required
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.***
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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