Paycheck Protection Program Loan (PPP)

The CARES Act includes a Paycheck Protection Program (PPP) which provides $350 billion to help small businesses impacted by the pandemic and economic downturn to make payroll and cover other expenses from February 15, 2020 to June 30, 2020.

Who is the lender? A Bank that is already an SBA lender.




When can I apply? April 3, 2020 for small businesses and sole proprietorships.

                                        April 10, 2020 for independent contractors and self-employed individuals.

Who can apply?     A business with not more than 500 employees; sole proprietors; independent contractors.

What is the maximum amount of the loan? $10 million.

How are loans are calculated?  Loans are calculated based upon “Average Monthly Payroll.” Most Applicants will use the average monthly payroll for 2019.

Average Monthly Payroll includes:

  • Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
  • Payment for vacation, parental, family, medical, or sick leave
  • Allowance for dismissal or separation
  • Group health care benefits, including insurance premiums
  • Retirement benefits
  • State or local tax assessed on the compensation of employees

Average Monthly Payroll excludes:

  • Employee/owner compensation in excess of $100,000
  • Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
  • Compensation of employees whose principal place of residence is outside of the U.S.
  • Qualified sick and family leave for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act

What is the interest rate? 4.00 % or less, and no prepayment fee.

What is the term?  10 years.

When is the first loan payment due? 6 months after loan origination date. (interest is accused during the deferment).

Proper Use of Use of Paycheck Protection Loan Proceeds:

  • Employee salaries, commissions, or similar compensations
  • Health insurance premiums and costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave
  • Payments of interest on any mortgage obligation but excluding any prepayments or payments of principal
  • Rent (including rent under a lease agreement)
  • Utilities
  • Interest on any other debt obligations that were incurred before the Covered Period

Is there a loan forgiveness program? Yes – calculated as the amount spent on permitted costs by the borrower during an 8-week period after the origination date of the loan.  The following expenses will be forgiven during the eight-week period beginning on the date the loan is initially funded for the following:

  • Payroll Costs,
  • mortgage interest payments,
  • rent payments, and
  • utility payments.

What reduces the forgiveness? The amount forgiven may not exceed the principal amount of the loan and will be reduced:

  • proportionately for any reduction in employees (by full-time equivalent) during the eight-week period following initial funding of the loan as compared to the average number of employees per month during the period of either (i) February 15, 2019 to June 30, 2019, or (ii) January 1, 2020 to February 29, 2020 (with adjustments for seasonal employers), and/or
  • by the amount of any reduction in total salary or total wages for employees who earned less than $100,000 in wages or salary during 2019 (with certain exceptions for rehired employees) during the eight-week period following initial funding of the loan, if such reduction is in excess of 25%.

How do I get forgiveness? You must apply through your lender for forgiveness on your loan. In this application, you must include:

  • Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings
  • Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities
  • Certification from an officer of your business or organization that is authorized to certify that the documentation provided is true and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

What collateral is required? No collateral is required

Is a personal guarantee required? No.

Where’s the Application Form?


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