CARES Act: Paycheck Protection Program (PPP)

Apr 02, 2020




What is the Paycheck Protection Program (PPP)?

Eligible businesses and not-for-profits will be able to borrow up to 2.5 times their average monthly payroll costs calculated using the 1-year period before the loan is made, but excluding payroll amounts over $100,000 for employees making more than $100,000.

Additionally, any outstanding amounts of Emergency Injury Disaster Loans (EIDL) that were obtained on or after January 31, 2020. Those EIDL loans are eligible to be refinanced under the PPP.

Up to a maximum loan amount of $10,000,000.

What is the application period?

Now through June 30, 2020.

Who is eligible?

Businesses, not-for-profit organizations, self-employed individuals, sole proprietors & independent contractors that meet U.S. SBA size standards as follows (the greater of):

  • Where applicable, the SBA size standard for employees within the industry that the borrower operates by NAICS code; or
  • Less than 500 Employees

The lender must also consider:

  • Whether the applicant was in operation as of February 15, 2020; and
  • Had employees for whom they paid salaries and payroll taxes or paid compensation to independent contractors

Who can make these loans?

Lenders who have delegated authority from the SBA.

What can I use the loan for?

  • Eligible use of proceeds includes:
  • Employee salaries, commissions or other similar compensation as well as other payroll costs.
  • Rent & Utilities
  • Costs related to the continuation of group health care benefits
  • Payments of interest on any mortgage obligation (cannot be used for prepayment penalties or principle payments on a mortgage)
  • Interest on any other debt obligation where the debt obligation was incurred prior to the covered period

Other loan features:

  • No collateral requirement
  • No personal guarantees required
  • No fees
  • Automatic payment deferral for 6 to 12 months
  • No prepayment penalty
  • The is a debt forgiveness provision

Details on the debt forgiveness provision:

Borrowers will be eligible for debt forgiveness on these loans in an amount equal to loan proceeds that were used to pay:

  • Payroll costs
  • Any payment of interest on a covered mortgage obligation
  • Any payment of rent made under a lease obligation that was in place before February 15, 2020
  • Utility payments for electricity, gas, water, telephone, or internet access as long as the service began before February 15, 2020

The debt forgiveness goes for 8-weeks from the start date of the loan. Documentation will be needed to support the amount of debt forgiveness.

Borrowers will need to certify the following:

  • That the uncertain of current economic conditions makes necessary the loan request to support the ongoing business operations of the business.
  • Acknowledging that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments and utility payments.
  • That the eligible recipient does not have an application pending for a loan under this program for the same purpose and duplicative of the amounts applied for or received under a covered loan; and
  • During the period beginning February 15, 2020 and ending on December 31, 2020, that the eligible recipient has not received amounts under this program for the same purpose and duplicative of the amounts under a covered loan.

What do I need to apply for these loans?

  1. Compile information on monthly payroll records for the last 12 months.
  2. Describe and provide information on any loans they have taken out since 1/31/2020.

How can ProNexus help you?

ProNexus has the tools and resources to help you navigate and understand the CARES Act, allowing you to quickly determine eligibility and best fits for your company. In fact, ProNexus can even take the entire process off your hands and run with it so you can focus on maintaining your business.

Let us help you apply for your CARES SBA Loan today!
Call: (585) 662-2298 or Email: to book a call.

Post by Kaitlin Alfvin

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